1
EXHIBIT 2.1
AGREEMENT
AMONG
HERCULES INCORPORATED,
MALLINCKRODT INC.,
ROCHE HOLDINGS, INC.
AND
GIVAUDAN-ROURE (INTERNATIONAL) SA
DATED AS OF FEBRUARY 4, 1997
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TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . 4
1.1 Capitalized Terms. . . . . . . . . . . . . . . . . 4
1.1.1 1934 Act . . . . . . . . . . . . . . . . . 5
1.1.2 1995 Financial Statements. . . . . . . . . 5
1.1.3 Accountants. . . . . . . . . . . . . . . . 5
1.1.4 Accountants' Net Determination . . . . . . 5
1.1.5 Accountants' Report. . . . . . . . . . . . 5
1.1.6 Adjusted Aggregate Value . . . . . . . . . 5
1.1.7 Adjustment Time. . . . . . . . . . . . . . 6
1.1.8 Affiliate. . . . . . . . . . . . . . . . . 6
1.1.9 Agreement. . . . . . . . . . . . . . . . . 6
1.1.10 Adjustment Arbitrator. . . . . . . . . . . 6
1.1.11 Benefit Arrangement. . . . . . . . . . . . 6
1.1.12 Business . . . . . . . . . . . . . . . . . 6
1.1.13 Business Personnel . . . . . . . . . . . . 6
1.1.14 Closing. . . . . . . . . . . . . . . . . . 6
1.1.15 Closing Date . . . . . . . . . . . . . . . 6
1.1.16 Closing Deadline . . . . . . . . . . . . . 6
1.1.17 Code . . . . . . . . . . . . . . . . . . . 7
1.1.18 Companies. . . . . . . . . . . . . . . . . 7
1.1.19 Company Tax Return . . . . . . . . . . . . 7
1.1.20 Contribution Agreement . . . . . . . . . . 7
1.1.21 Cost of Arbitration. . . . . . . . . . . . 7
1.1.22 Current Assets . . . . . . . . . . . . . . 7
1.1.23 Current Liabilities. . . . . . . . . . . . 7
1.1.24 D&F Transaction Agreements . . . . . . . . 8
1.1.25 Damages. . . . . . . . . . . . . . . . . . 8
1.1.26 Designated Buyers. . . . . . . . . . . . . 8
1.1.27 Designated Transaction Agreements. . . . . 9
1.1.28 Disclosure Schedule. . . . . . . . . . . . 9
1.1.29 Disputing Party. . . . . . . . . . . . . . 9
1.1.30 Disputing Party's Proposal . . . . . . . . 9
1.1.31 Environment. . . . . . . . . . . . . . . . 9
1.1.32 Environmental Breach . . . . . . . . . . . 9
1.1.33 Environmental Indemnification Threshold. . 9
1.1.34 Environmental Requirements . . . . . . . . 9
1.1.35 ERISA Affiliate. . . . . . . . . . . . . . 10
1.1.36 Estimated Adjusted Aggregate Value . . . . 10
1.1.37 Estimated Long-Term Liabilities
Adjustment . . . . . . . . . . . . . . . . 11
1.1.38 Estimated Tastemaker B.V. Value. . . . . . 11
1.1.39 Estimated Working Capital Adjustment . . . 11
1.1.40 F&F. . . . . . . . . . . . . . . . . . . . 11
1.1.41 F&F Transaction Agreement. . . . . . . . . 11
1.1.42 FCPA . . . . . . . . . . . . . . . . . . . 11
1.1.43 Final Net Determination. . . . . . . . . . 12
1.1.44 Financial Statements . . . . . . . . . . . 12
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1.1.45 Fries Withdrawal . . . . . . . . . . . . . 12
1.1.46 Fries Withdrawal Closing . . . . . . . . . 12
1.1.47 Fries Withdrawal Documents . . . . . . . . 12
1.1.48 GAAP . . . . . . . . . . . . . . . . . . . 12
1.1.49 Governmental Authority . . . . . . . . . . 12
1.1.50 HCI. . . . . . . . . . . . . . . . . . . . 12
1.1.51 HFI. . . . . . . . . . . . . . . . . . . . 12
1.1.52 HNBV . . . . . . . . . . . . . . . . . . . 12
1.1.53 Hazardous Substances . . . . . . . . . . . 13
1.1.54 Hercules Transaction Agreement . . . . . . 14
1.1.55 Indemnification Threshold. . . . . . . . . 14
1.1.56 Indemnified Party. . . . . . . . . . . . . 14
1.1.57 Indemnifying Party . . . . . . . . . . . . 14
1.1.58 Intellectual Property. . . . . . . . . . . 14
1.1.59 Interim Financial Statements . . . . . . . 14
1.1.60 International Plan . . . . . . . . . . . . 14
1.1.61 Licenses . . . . . . . . . . . . . . . . . 14
1.1.62 Long-Term Liabilities. . . . . . . . . . . 14
1.1.63 Long-Term Liabilities Adjustment . . . . . 15
1.1.64 Long-Term Liabilities Baseline . . . . . . 15
1.1.65 Multiemployer Plan . . . . . . . . . . . . 16
1.1.66 Net Working Capital. . . . . . . . . . . . 16
1.1.67 Newco. . . . . . . . . . . . . . . . . . . 16
1.1.68 Newco Preferred Stock. . . . . . . . . . . 16
1.1.69 Owners . . . . . . . . . . . . . . . . . . 16
1.1.70 Owners' Knowledge. . . . . . . . . . . . . 16
1.1.71 Owners' Maximum Liability. . . . . . . . . 16
1.1.72 Partners' Representatives. . . . . . . . . 17
1.1.73 Partnership Agreement. . . . . . . . . . . 17
1.1.74 PBGC . . . . . . . . . . . . . . . . . . . 17
. . . . . . . . . . . . . . . . . . . . . . . . . 17
1.1.75 PBO. . . . . . . . . . . . . . . . . . . . 17
1.1.76 PBO. . . . . . . . . . . . . . . . . . . . 17
1.1.77 Pinnacle . . . . . . . . . . . . . . . . . 17
1.1.78 Plan . . . . . . . . . . . . . . . . . . . 17
1.1.79 Pre-Closing Tax Period . . . . . . . . . . 17
1.1.80 Short Period . . . . . . . . . . . . . . . 17
1.1.81 Specified Officers . . . . . . . . . . . . 17
1.1.82 SPHN . . . . . . . . . . . . . . . . . . . 18
1.1.83 Tastemaker B.V. Current Assets . . . . . . 18
1.1.84 Tastemaker B.V. Current Liabilities. . . . 19
1.1.85 Tastemaker B.V. Long-Term Liabilities. . . 19
1.1.86 Tastemaker B.V. Long-Term Liabilities
Adjustment . . . . . . . . . . . . . . . . 19
1.1.87 Tastemaker B.V. Long-Term Liabilities
Baseline . . . . . . . . . . . . . . . . . 20
1.1.88 Tastemaker B.V. Subsidiary . . . . . . . . 20
1.1.89 Tastemaker B.V. Working Capital. . . . . . 20
1.1.90 Tastemaker B.V. Working Capital
Adjustment . . . . . . . . . . . . . . . . 21
1.1.91 Tastemaker B.V. Working Capital
Baseline . . . . . . . . . . . . . . . . . 21
1.1.92 Tastemaker B.V. Value. . . . . . . . . . . 21
1.1.93 Tastemaker Combined and Consolidated
Value. . . . . . . . . . . . . . . . . . . 22
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1.1.94 Tastemaker Debt. . . . . . . . . . . . . . 22
1.1.95 Tastemaker Subsidiaries. . . . . . . . . . 22
1.1.96 Tax. . . . . . . . . . . . . . . . . . . . 22
1.1.97 Tax Annex. . . . . . . . . . . . . . . . . 23
1.1.98 Tax Loss . . . . . . . . . . . . . . . . . 23
1.1.99 TFI. . . . . . . . . . . . . . . . . . . . 23
1.1.100 Transaction Documents. . . . . . . . . . . 23
1.1.101 Transition Team Protocol . . . . . . . . . 23
1.1.102 VUT. . . . . . . . . . . . . . . . . . . . 23
1.1.103 Working Capital Adjustment . . . . . . . . 23
1.1.104 Working Capital Baseline . . . . . . . . . 24
1.2 Accounting Terms . . . . . . . . . . . . . . . . . 24
1.3 Construction . . . . . . . . . . . . . . . . . . . 24
1.4 Captions and Headings. . . . . . . . . . . . . . . 24
1.5 No Party Deemed Drafter. . . . . . . . . . . . . . 24
1.6 Reformation. . . . . . . . . . . . . . . . . . . . 25
1.7 Currency . . . . . . . . . . . . . . . . . . . . . 25
1.8 Materiality. . . . . . . . . . . . . . . . . . . . 25
2. THE DESIGNATED TRANSACTIONS, F&F TRANSACTION, HERCULES
TRANSACTION AND MALLINCKRODT TRANSACTION. . . . . . . . . 26
2.1 Designated Transactions. . . . . . . . . . . . . . 26
2.2 F&F Transaction. . . . . . . . . . . . . . . . . . 27
2.3 Hercules Transaction . . . . . . . . . . . . . . . 28
2.4 Mallinckrodt Transaction . . . . . . . . . . . . . 28
2.5 Consideration. . . . . . . . . . . . . . . . . . . 29
2.6 Determination of Adjusted Aggregate Value and
Tastemaker B.V. Value. . . . . . . . . . . . . . . 29
2.6.1 Adjusted Aggregate Value . . . . . . . . . 29
2.6.2 Tastemaker B.V. Value. . . . . . . . . . . 34
2.7 Closing Aggregate Value Adjustment . . . . . . . . 36
2.8 Closing. . . . . . . . . . . . . . . . . . . . . . 38
3. REPRESENTATIONS AND WARRANTIES OF THE OWNERS. . . . . . . 39
3.1 Organization, Standing and Power; Authority of
Tastemaker for the Designated Transaction
Agreements . . . . . . . . . . . . . . . . . . . . 39
3.2 Ownership of Tastemaker B.V., Tastemaker
Subsidiaries and Tastemaker B.V. Subsidiary and
Pinnacle . . . . . . . . . . . . . . . . . . . . . 40
3.3 Consents and Approvals; No Violation . . . . . . . 43
3.4 Financial Statements . . . . . . . . . . . . . . . 46
3.5 Liabilities. . . . . . . . . . . . . . . . . . . . 46
3.6 Books and Records. . . . . . . . . . . . . . . . . 47
3.7 Accounts Receivable. . . . . . . . . . . . . . . . 47
3.8 Inventory. . . . . . . . . . . . . . . . . . . . . 47
3.9 Absence of Certain Changes or Events . . . . . . . 48
3.10 No Existing Violation, Default, Etc. . . . . . . . 51
3.11 Licenses and Permits . . . . . . . . . . . . . . . 53
3.12 Environmental Matters. . . . . . . . . . . . . . . 53
3.13 Tax Matters. . . . . . . . . . . . . . . . . . . . 57
3.14 Orders, Litigation, Etc. . . . . . . . . . . . . . 58
3.15 Labor Matters. . . . . . . . . . . . . . . . . . . 59
3.16 Contracts. . . . . . . . . . . . . . . . . . . . . 60
3.17 Employee Benefits. . . . . . . . . . . . . . . . . 62
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3.18 Intellectual Property. . . . . . . . . . . . . . . 69
3.19 Properties . . . . . . . . . . . . . . . . . . . . 72
3.20 Insurance Coverage . . . . . . . . . . . . . . . . 74
3.21 Company Brokers. . . . . . . . . . . . . . . . . . 75
3.22 Withdrawal Consents and Approvals; No Violation. . 75
4. REPRESENTATIONS AND WARRANTIES OF THE INTERESTED
PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.1 Organization, Standing and Power . . . . . . . . . 79
4.2 Authority. . . . . . . . . . . . . . . . . . . . . 79
4.3 Consents and Approvals; No Violation . . . . . . . 80
4.4 Brokers. . . . . . . . . . . . . . . . . . . . . . 82
4.5 Withdrawal Consents and Approvals; No Violation. . 82
5. COVENANTS OF THE OWNERS . . . . . . . . . . . . . . . . . 85
5.1 Access to Properties and Records . . . . . . . . . 85
5.2 Operations . . . . . . . . . . . . . . . . . . . . 85
5.3 Financial Statements . . . . . . . . . . . . . . . 86
5.4 Fees . . . . . . . . . . . . . . . . . . . . . . . 87
5.5 Non-Solicitation of Employees. . . . . . . . . . . 87
5.6 Confidentiality. . . . . . . . . . . . . . . . . . 88
5.7 Accounts; Safe Deposit Boxes; Powers of
Attorney; Officers and Directors . . . . . . . . . 88
5.8 Access . . . . . . . . . . . . . . . . . . . . . . 89
5.9 Resignations . . . . . . . . . . . . . . . . . . . 89
5.10 Tastemaker B.V. Partnership Election . . . . . . . 89
5.11 Third Party Infringement . . . . . . . . . . . . . 90
5.12 Third Party Defaults . . . . . . . . . . . . . . . 90
5.13 Resignations . . . . . . . . . . . . . . . . . . . 90
5.14 Severance and Stay Incentives. . . . . . . . . . . 90
5.15 Tax Waiver Notification. . . . . . . . . . . . . . 91
6. COVENANTS OF THE INTERESTED PERSONS . . . . . . . . . . . 91
6.1 Compliance with Transition Team Protocol . . . . . 91
6.2 Fees . . . . . . . . . . . . . . . . . . . . . . . 91
6.3 Record Retention and Access. . . . . . . . . . . . 92
6.4 Confidentiality. . . . . . . . . . . . . . . . . . 92
6.5 Responsibility for D&F Transaction Agreements. . . 93
6.6 Xxxxxxx Landfill Site. . . . . . . . . . . . . . . 94
6.7 Designated Transaction Approvals . . . . . . . . . 94
7.1 Satisfaction of Conditions . . . . . . . . . . . . 94
7.2 Governmental Consents. . . . . . . . . . . . . . . 95
7.3 Public Announcements . . . . . . . . . . . . . . . 96
7.4 Further Assurances . . . . . . . . . . . . . . . . 97
7.5 Tax Annex. . . . . . . . . . . . . . . . . . . . . 97
7.6 Tastemaker B.V. Pension. . . . . . . . . . . . . . 97
7.7 Tastemaker Debt. . . . . . . . . . . . . . . . . . 97
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS:
INDEMNITY FOR DAMAGES . . . . . . . . . . . . . . . . . . 99
8.1 Survival . . . . . . . . . . . . . . . . . . . . . 99
8.2 Indemnity by the Interested Persons. . . . . . . . 100
8.3 Indemnity by the Owners. . . . . . . . . . . . . . 101
8.4 Indemnity by Hercules. . . . . . . . . . . . . . . 103
8.5 Indemnity by Mallinckrodt. . . . . . . . . . . . . 103
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8.6 Limitations on the Owners' Indemnification
Obligations. . . . . . . . . . . . . . . . . . . . 104
8.7 Limitations of Remedies. . . . . . . . . . . . . . 108
8.8 Indemnification Procedures . . . . . . . . . . . . 109
8.8.1 Notice of Claims . . . . . . . . . . . . . 109
8.8.2 Failure to Respond to Notice . . . . . . . 110
8.8.3 Notice of Dispute. . . . . . . . . . . . . 111
8.8.4 Third Party Claims . . . . . . . . . . . . 112
8.8.4.1 Participation by Indemnified
Party . . . . . . . . . . . . . . . . 113
8.8.4.2 Full Release . . . . . . . . . . 113
8.8.4.3 Refusal to Settle. . . . . . . . 114
8.8.5 Claims Made in Written Notice. . . . . . . 115
8.8.6 Control in Cases of Environmental
Breach . . . . . . . . . . . . . . . . . . 115
8.9 Tax Annex is Controlling . . . . . . . . . . . . . 116
8.10 Registration Indemnity . . . . . . . . . . . . . . 117
8.11 Mitigation of Damages. . . . . . . . . . . . . . . 118
8.12 Reliance Upon Agreement. . . . . . . . . . . . . . 118
9. RESOLUTION OF DISPUTES. . . . . . . . . . . . . . . . . . 119
9.1 Conclusive and Exclusive . . . . . . . . . . . . . 119
9.2 Resolution Panel . . . . . . . . . . . . . . . . . 121
9.3 Position Statements. . . . . . . . . . . . . . . . 122
9.4 Negotiations . . . . . . . . . . . . . . . . . . . 123
9.5 Resolution Panel Decision. . . . . . . . . . . . . 123
9.6 Forum and Waivers. . . . . . . . . . . . . . . . . 123
10. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 124
10.1 Conditions to Obligations of the Interested
Persons. . . . . . . . . . . . . . . . . . . . . . 124
10.1.1 Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . . 124
10.1.2 Performance of Agreements. . . . . . . . . 125
10.1.3 Officers' Certificate. . . . . . . . . . . 125
10.1.4 Applicable Law; Governmental Approvals;
Filings. . . . . . . . . . . . . . . . . . 125
10.1.5 Litigation; Governmental Action. . . . . . 126
10.1.6 Material Change. . . . . . . . . . . . . . 126
10.1.7 Transaction Agreement Conditions . . . . . 126
10.1.8 Works Council Act. . . . . . . . . . . . . 127
10.1.9 Designated Transactions Closing. . . . . . 127
10.1.10 Specified Third Party Consents . . . . . . 127
10.1.11 Withdrawal Approvals; Litigation . . . . . 127
10.2 Conditions to Obligations of the Owners. . . . . . 128
10.2.1 Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . . 128
10.2.2 Performance of Agreements. . . . . . . . . 129
10.2.3 Officer's Certificate. . . . . . . . . . . 129
10.2.4 Applicable Law; Governmental Approvals;
Filings. . . . . . . . . . . . . . . . . . 129
10.2.5 Litigation; Governmental Action. . . . . . 130
10.2.6 Transaction Agreement Conditions . . . . . 130
10.2.7 Designated Transaction Closing . . . . . . 131
10.2.8 Withdrawal Approval; Litigation. . . . . . 131
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10.3 Extension of the Closing Date. . . . . . . . . . . 132
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 133
11.1 Termination and Cancellation . . . . . . . . . . . 133
11.2 Effect of Termination. . . . . . . . . . . . . . . 135
11.3 Notices. . . . . . . . . . . . . . . . . . . . . . 135
11.3.1 Hercules Notice Address. . . . . . . . . . 136
11.3.2 Mallinckrodt Notice Address. . . . . . . . 136
11.3.3 Roche Notice Address . . . . . . . . . . . 137
11.3.4 GRI Notice Address . . . . . . . . . . . . 137
11.4 Assignment . . . . . . . . . . . . . . . . . . . . 138
11.5 Waiver . . . . . . . . . . . . . . . . . . . . . . 138
11.6 Amendments . . . . . . . . . . . . . . . . . . . . 139
11.7 Limitations on Rights of Third Parties . . . . . . 139
11.8 Counterparts . . . . . . . . . . . . . . . . . . . 139
11.9 Governing Law. . . . . . . . . . . . . . . . . . . 139
11.10 Entire Agreement . . . . . . . . . . . . . . . . . 139
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Table of Appendices
APPENDIX A - Tastemaker Subsidiaries and Tastemaker B.V. Subsidiary
APPENDIX B - Form of Designated Transaction Agreements
APPENDIX C - Disclosure Schedule
APPENDIX D - Tax Annex
APPENDIX E - Transition Team Protocol
APPENDIX F - Foreign Approvals
APPENDIX G - Withdrawal Approvals
APPENDIX H - Confidentiality Letter
APPENDIX I - Purchase Price for Assets under Designated Transaction Agreements
APPENDIX J - Required Consents
APPENDIX K - Governmental Approvals
APPENDIX L - Plans and Plan Assets
THE TABLE OF APPENDICES SET FORTH ABOVE BRIEFLY IDENTIFIES THE CONTENTS OF
ALL APPENDICES TO THE AGREEMENT DATED AS OF FEBRUARY 4, 1997 AMONG MALLINCKRODT
INC., HERCULES INCORPORATED, ROCHE HOLDINGS, INC. AND GIVAUDAN-ROURE
(INTERNATIONAL) SA (THE "AGREEMENT"). WITH THE EXCEPTION OF APPENDIX D WHICH IS
INCLUDED WITH THIS FILING, ALL OF THE APPENDICES LISTED IN THE TABLE OF
APPENDICES ARE OMITTED, AND HERCULES INCORPORATED AGREES TO FURNISH
SUPPLEMENTALLY A COPY OF ANY OMITTED APPENDIX TO THE SECURITIES AND EXCHANGE
COMMISSION UPON REQUEST.
9
AGREEMENT
This Agreement (the "AGREEMENT"), dated as of February 4, 1997, is made and
entered into by and among HERCULES INCORPORATED, a Delaware corporation
("HERCULES"), MALLINCKRODT INC., a New York corporation ("MALLINCKRODT"),
GIVAUDAN-ROURE (INTERNATIONAL) SA, a Swiss corporation ("GRI"), and ROCHE
HOLDINGS, INC., a Delaware corporation ("ROCHE" and, together with GRI, the
"INTERESTED PERSONS" and each individually an "INTERESTED PERSON").
RECITALS
A. Tastemaker, a general partnership organized and existing under the laws
of the State of Delaware ("TASTEMAKER"), and Tastemaker B.V., a limited
liability entity organized and existing under the laws of The Netherlands
("TASTEMAKER B.V."), together are engaged globally, both directly and indirectly
through their respective subsidiaries, in the development, manufacture and sale
of ingredients and compounds used primarily to provide flavor or taste in food
and beverage products (the "BUSINESS").
B. Tastemaker is owned forty percent (40%) by Hercules Flavor, Inc., a
Delaware corporation and wholly owned subsidiary of Hercules ("HFI"), ten
percent (10%) by Hercules Credit, Inc., a Delaware corporation and wholly owned
subsidiary of Hercules ("HCI"), and fifty percent (50%) by Fries & Fries, Inc.,
a Delaware corporation and wholly owned subsidiary of Mallinckrodt ("F&F").
C. Tastemaker B.V. is owned one percent (1%) by Tastemaker, forty-nine and
one-half percent (49.5%) by F&F and forty-nine and one-half percent (49.5%) by
Hercules Nederland B.V., a limited liability entity organized and existing under
the laws of The Netherlands and wholly owned subsidiary of Hercules ("HNBV").
D. Tastemaker Finance, Inc. ("TFI"), a Delaware corporation, and each other
Tastemaker Subsidiary listed on APPENDIX A are, except as otherwise set forth in
such Appendix, wholly owned, directly or indirectly, by Tastemaker. Each
Tastemaker B.V. Subsidiary listed on APPENDIX A is, except as otherwise set
forth in such Appendix, wholly owned by Tastemaker B.V.
E. Roche or one of its subsidiaries intends to organize Givaudan-Roure
(United States) Inc., a Delaware wholly owned subsidiary ("NEWCO"), which will
be, prior to the consummation of the transactions contemplated by the
Contribution Agreement (as hereinafter defined), capitalized with 100% of the
issued and outstanding common stock of Givaudan-Roure Corporation, Inc., a New
Jersey corporation and a wholly owned subsidiary of Roche.
F. GRI or certain Affiliates of Roche and GRI, as the case may be, (GRI,
together with such Affiliates, the "DESIGNATED BUYERS") and Tastemaker intend to
enter into a series of Purchase and Sale Agreements in substantially the form of
APPENDIX B attached hereto (the "DESIGNATED TRANSACTION AGREEMENTS"),
10
subject and pursuant to which and prior to the consummation of the transactions
contemplated by the F&F Transaction Agreement (as hereinafter defined), the
Hercules Transaction Agreement (as hereinafter defined) and the Contribution
Agreement (as hereinafter defined), Tastemaker shall transfer to the Designated
Buyers, and the Designated Buyers shall acquire (i) certain of Tastemaker's
foreign subsidiaries (specified in APPENDIX I attached hereto), in exchange for
the aggregate payment by the Designated Buyers of cash in the amount specified,
along with the method to be used to calculate the individual payments making up
such aggregate payment, and (ii) TFI and Tastemaker's one percent (1%) interest
in Tastemaker B.V. for the amounts specified next to their respective names, all
as set forth in APPENDIX I attached hereto.
G. Concurrently with the execution of this Agreement and the Hercules
Transaction Agreement (as hereinafter defined), F&F and GRI have entered into a
Purchase and Sale Agreement dated as of the date hereof (the "F&F TRANSACTION
AGREEMENT"), subject and pursuant to which and subsequent to the consummation of
the transactions contemplated by the Designated Transaction Agreements, F&F has
agreed to transfer to GRI, and GRI has agreed to acquire, F&F's forty-nine and
one-half percent (49.5%) interest in Tastemaker B.V. in exchange for the payment
by GRI to F&F of cash in the amount specified in the F&F Transaction Agreement.
H. Concurrently with the execution of this Agreement and the F&F
Transaction Agreement, the Interested Persons, Hercules and HNBV have entered
into a PURCHASE AND SALE AGREEMENT dated as of the date hereof (the "HERCULES
TRANSACTION AGREEMENT"), subject and pursuant to which and subject and pursuant
to the terms and conditions of this Agreement, subsequent to the consummation of
the transactions contemplated by the Designated Transaction Agreements, Hercules
and HNBV have agreed that HNBV shall transfer to GRI, and Roche and GRI have
agreed that GRI shall acquire, HNBV's interest in Tastemaker B.V. through the
acquisition by GRI of HNBV's forty-nine and one-half percent (49.5%) interest in
Tastemaker B.V. for cash in the amount specified in the Hercules Transaction
Agreement.
I. Subsequent to the consummation of the transactions contemplated by the
Designated Transaction Agreements, the F&F Transaction Agreement and the
Hercules Transaction Agreement, Mallinckrodt desires to contribute to Newco
Mallinckrodt's interest in F&F in a share contribution which Mallinckrodt and
Roche intend will qualify as a tax-free contribution under Section 351 of the
Code (as hereinafter defined), subject and pursuant to the terms and conditions
of this Agreement and the Contribution Agreement dated as of the date hereof
among Mallinckrodt, Newco and the Interested Persons (the "CONTRIBUTION
AGREEMENT") which shall be entered into concurrently herewith.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements, provisions and covenants contained herein, the parties hereto
agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Capitalized Terms. The following capitalized terms,
11
when used in this Agreement and not otherwise defined, shall have the following
indicated meanings:
1.1.1 1934 Act shall mean the United States Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
1.1.2 1995 Financial Statements shall mean the December 31, 1995
audited combined consolidated financial statements of Tastemaker and
Tastemaker B.V.
1.1.3 Accountants shall have the meaning ascribed to such term in
Section 2.6.1 of this Agreement.
1.1.4 Accountants' Net Determination shall have the meaning ascribed
to such term in Section 2.6.1 hereof.
1.1.5 Accountants' Report shall have the meaning ascribed to such term
in Section 2.6.1 of this Agreement.
1.1.6 Adjusted Aggregate Value shall mean an amount equal to the
Tastemaker Combined and Consolidated Value, less the PBO Adjustment, and
(A) either (i) increased by the Working Capital Adjustment, if the Net
Working Capital as of the Adjustment Time exceeds the Working Capital
Baseline or (ii) decreased by the Working Capital Adjustment, if the
Working Capital Baseline exceeds the Net Working Capital as of the
Adjustment Time, and (B) either (i) decreased by the Long-Term Liabilities
Adjustment if the Long-Term Liabilities as of the Adjustment Time exceed
the Long-Term Liabilities Baseline, or (ii) increased by the Long-Term
Liabilities Adjustment if the Long-Term Liabilities Baseline exceeds the
Long-Term Liabilities as of the Adjustment Time.
1.1.7 Adjustment Time shall mean the close of business on the business
day immediately preceding the Closing Date.
1.1.8 Affiliate shall mean, with respect to any entity, an entity
controlling, controlled by or under common control with such entity, with
control being defined as the power to direct the management of an entity
through direct or indirect ownership.
1.1.9 Agreement shall mean this Agreement, the Disclosure Schedule and
all schedules, annexes, exhibits and appendices hereto.
1.1.10 Adjustment Arbitrator shall have the meaning ascribed to such
term in Section 2.6.1 of this Agreement.
1.1.11 Benefit Arrangement shall have the meaning ascribed to such
term in Section 3.17 of this Agreement.
1.1.12 Business shall have the meaning ascribed to
12
such term in Recital A above.
1.1.13 Business Personnel shall have the meaning ascribed to such term
in Section 3.15 of this Agreement.
1.1.14 Closing shall have the meaning ascribed to such term in Section
2.8 hereof.
1.1.15 Closing Date shall mean the date upon which the transactions
contemplated by the Transaction Documents and the D&F Transaction
Agreements are consummated.
1.1.16 Closing Deadline shall mean July 31, 1997; PROVIDED, HOWEVER
that if the condition set forth in Section 10.1.4 or Section 10.2.4 is not
satisfied or, to the extent permitted by law, waived in writing on or
before July 31, 1997, the Closing Deadline shall be August 31, 1997.
1.1.17 Code shall mean the Internal Revenue Code of 1986, as amended.
1.1.18 Companies shall mean the collective reference to Tastemaker,
Tastemaker B.V., the Tastemaker Subsidiaries and the Tastemaker B.V.
Subsidiary, and "COMPANY" shall mean any one of the Companies.
1.1.19 Company Tax Return shall have the meaning ascribed to such term
in the Tax Annex.
1.1.20 Contribution Agreement shall have the meaning ascribed to such
term in Recital I above.
1.1.21 Cost of Arbitration shall have the meaning ascribed to such
term in Section 2.6.1 hereof.
1.1.22 Current Assets shall mean, as of any time, all items, excluding
deferred taxes and the current portion, if any, of the Investment Assets
(as defined in the Partnership Agreement), which would be classified as a
current asset under the heading "CURRENT ASSETS" on a combined consolidated
balance sheet of Tastemaker and Tastemaker B.V. determined and prepared in
accordance with GAAP applied on a basis consistent with the practices and
methodologies used in preparing the December 31, 1995 audited combined
consolidated balance sheet of Tastemaker and Tastemaker B.V.
1.1.23 Current Liabilities shall mean, as of any time, all items,
excluding deferred taxes, the Tastemaker Debt and any Tax that is the
liability or obligation of Tastemaker, which would be classified as a
current liability under the heading "CURRENT LIABILITIES" on a combined
consolidated balance sheet of Tastemaker and Tastemaker B.V. determined and
prepared in accordance with GAAP applied on a
13
basis consistent with the practices and methodologies used in preparing the
December 31, 1995 audited combined consolidated balance sheet of Tastemaker
and Tastemaker B.V.; provided, that when determining whether any Tax is
included as a Current Liability for purposes of calculating the Adjusted
Aggregate Value, the principles of Treasury Regulations Section
1.1502-76(b), applied in the manner set forth in the Tax Annex, shall
govern.
1.1.24 D&F Transaction Agreements shall mean the collective reference
to the F&F Transaction Agreement and the Designated Transaction Agreements.
1.1.25 Damages shall mean any claim, cost, loss,
liability, fine, penalty, interest, payment, expense and/or damage
(including reasonable attorneys' and accountants' fees and expenses)
resulting from or arising out of any fact, event or circumstance with
respect to which a party to this Agreement is obligated to provide
indemnification pursuant to Article 8 hereof.
1.1.26 Designated Buyers shall have the meaning ascribed to such term
in Recital F of this Agreement.
1.1.27 Designated Transaction Agreements shall have the meaning
ascribed to such term in Recital F of this Agreement.
1.1.28 Disclosure Schedule shall mean the Disclosure Schedule dated as
of the date hereof, a copy of which Disclosure Schedule is attached hereto
as APPENDIX C.
1.1.29 Disputing Party shall have the meaning ascribed to each term in
Section 2.6 of this Agreement.
1.1.30 Disputing Party's Proposal shall have the meaning ascribed to
such term in Section 2.6 of this Agreement.
1.1.31 Environment shall mean the ocean, natural resources (including
flora and fauna), soil, surface water, ground water, any present or
potential drinking water supply, land surface, subsurface strata or the
ambient air.
1.1.32 Environmental Breach shall have the meaning ascribed to such
term in Section 8.6(b) of this Agreement.
1.1.33 Environmental Indemnification Threshold shall have the meaning
ascribed to such term in Section 8.6(b) of this Agreement.
1.1.34 Environmental Requirements shall mean all federal, state, local
and foreign laws, rules, regulations, orders, decrees, judgments, permits
and licenses in effect on the Closing Date, relating primarily to health,
safety or
14
the Environment or the generation, handling, disposal, transportation,
release or threatened release of Hazardous Substances, including those set
forth in or promulgated pursuant to the Federal Water Pollution Control
Act, 33 U.S.C. Section 1251 et seq., as amended ("FWPCA"), the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq., as amended ("SDWA"),
the Clean Air Act, 42 U.S.C. Section 7401 et seq., as amended ("CAA"), the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., as
amended ("RCRA"), the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., as amended ("TSCA"), the Occupational Safety and Health Act, 29
U.S.C. Section 651 et seq., as amended ("OSHA"), the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section
9601, as amended ("CERCLA"), the Emergency Planning and Community
Right-To-Know Act, 42 U.S.C. Section 11001 ("EPCRA"), and the substantive
equivalent of the foregoing in any state, local or foreign jurisdiction.
1.1.35 ERISA Affiliate shall have the meaning ascribed to such term in
Section 3.17 of this Agreement.
1.1.36 Estimated Adjusted Aggregate Value shall mean an amount equal
to the Tastemaker Combined and Consolidated Value, less the PBO Adjustment,
and (A) either (i) increased by the Estimated Working Capital Adjustment,
if the Net Working Capital as of the Adjustment Time as estimated by the
Owners exceeds the Working Capital Baseline, or (ii) decreased by the
Estimated Working Capital Adjustment, if the Working Capital Baseline
exceeds the Net Working Capital as of the Adjustment Time as estimated by
the Owners, and (B) either (i) decreased by the Estimated Long-Term
Liabilities Adjustment if the Long-Term Liabilities as of the Adjustment
Time as estimated by the Owners exceed the Long-Term Liabilities Baseline,
or (ii) increased by the Estimated Long-Term Liabilities Adjustment if the
Long-Term Liabilities Baseline exceeds the Long-Term Liabilities as of the
Adjustment Time as estimated by the Owners.
1.1.37 Estimated Long-Term Liabilities Adjustment shall mean the
Long-Term Liabilities Adjustment determined based upon the Owners' estimate
of the balance of Long-Term Liabilities as of the Adjustment Time and
delivered to each of the Interested Persons by the Owners pursuant to
Section 2.6 below.
1.1.38 Estimated Tastemaker B.V. Value shall mean the Owners' estimate
of the Tastemaker B.V. Value delivered to the Interested Persons pursuant
to Section 2.6.2 hereof.
1.1.39 Estimated Working Capital Adjustment shall mean the Working
Capital Adjustment determined based upon the Owners' estimate of the
balances of Current Assets and Current Liabilities as of the Adjustment
Time and delivered to each of the Interested Persons by the Owners pursuant
to
15
Section 2.6 below.
1.1.40 F&F shall have the meaning ascribed to such term in Recital B
above.
1.1.41 F&F Transaction Agreement shall have the meaning ascribed to
such term in Recital G above.
1.1.42 FCPA shall have the meaning ascribed to such term in Section
3.10 of this Agreement.
1.1.43 Final Net Determination shall have the meaning ascribed to such
term in Section 2.6.1 hereof.
1.1.44 Financial Statements shall have the meaning ascribed to such
term in Section 3.5 of this Agreement.
1.1.45 Fries Withdrawal shall have the meaning ascribed to the term
"FRIES WITHDRAWAL" in the Partnership Agreement.
1.1.46 Fries Withdrawal Closing shall have the meaning ascribed to the
term "WITHDRAWAL CLOSING" in the Partnership Agreement.
1.1.47 Fries Withdrawal Documents shall have the meaning ascribed to
the term "FRIES WITHDRAWAL DOCUMENTS" in the Partnership Agreement.
1.1.48 GAAP shall mean generally accepted accounting principles as in
effect in the United States of America at the time of the preparation of
the financial statements with respect to which such term is used.
1.1.49 Governmental Authority shall mean any domestic (federal, state
or local) or foreign government or governmental agency, department,
commission, authority, court, tribunal or adjudicative body.
1.1.50 HCI shall have the meaning ascribed to such term in Recital B
above.
1.1.51 HFI shall have the meaning ascribed to such term in Recital B
above.
1.1.52 HNBV shall have the meaning ascribed to such term in Recital C
above.
1.1.53 Hazardous Substances shall mean any materials defined as
pollutants, contaminants, or hazardous or toxic materials, substances or
waste in any way by, and only to the extent regulated by, any Environmental
Requirements as of the Closing Date, including without limitation: (i) any
"HAZARDOUS SUBSTANCE" or "POLLUTANT OR CONTAMINANT," as defined in Sections
101(14), (33) of CERCLA or the
16
regulations designated pursuant to Section 102 of CERCLA, 42 U.S.C. Section
9602 and found at 40 C.F.R. Part 302, and as regulated by CERCLA, and any
element, compound, mixture, solution, or substance designated pursuant to
Section 102 of CERCLA and as regulated by CERCLA, (ii) any substance
designated pursuant to Section 311(b)(2)(A) of FWPCA and as regulated by
FWPCA, (iii) any hazardous waste having the characteristics identified
under or listed pursuant to Section 3001 of RCRA, 42 U.S.C. Sections 6901,
6921, (iv) any substance containing petroleum, as defined in Section
9001(8) of RCRA, 42 U.S.C. Section 6991(8) or 40 C.F.R. Part 280, its
derivatives, byproducts and hydrocarbons and as regulated by RCRA, (v) any
toxic pollutant listed under Section 307(a) of the FWPCA, 33 U.S.C. Section
1317(a) and as regulated by FWPCA, (vi) any hazardous air pollutant listed
under Section 112 of the Clean Air Act, 42 U.S.C. Sections 7401, 7412, as
amended and as regulated by the Clean Air Act, (vii) any imminently
hazardous chemical substance or mixture with respect to which action has
been taken pursuant to Section 7 of TCSA, 15 U.S.C. Sections 2601, 2606, as
amended and as regulated by TSCA, or (viii) any other hazardous or toxic
materials, contaminants, substances or wastes regulated by applicable
Environmental Requirements.
1.1.54 Hercules Transaction Agreement shall have the meaning ascribed
to such term in Recital H above.
1.1.55 Indemnification Threshold shall mean an amount equal to one
percent (1%) of the Tastemaker Combined and Consolidated Value.
1.1.56 Indemnified Party shall have the meaning ascribed to such term
in Section 8.8 of this Agreement.
1.1.57 Indemnifying Party shall have the meaning ascribed to such term
in Section 8.8 of this Agreement.
1.1.58 Intellectual Property shall have the meaning ascribed to such
term in Section 3.18 of this Agreement.
1.1.59 Interim Financial Statements shall have the meaning ascribed to
such term in Section 3.4 of this Agreement.
1.1.60 International Plan shall have the meaning ascribed to such term
in Section 3.17 of this Agreement.
1.1.61 Licenses shall have the meaning ascribed to such term in
Section 3.11 of this Agreement.
1.1.62 Long-Term Liabilities shall mean, at any time, the liabilities
of the Companies (other than Current Liabilities, the long-term component
of pension liabilities, deferred taxes, the Tastemaker Debt and any Tax
that is a
17
liability or obligation of Tastemaker) which would be classified as a
liability under the heading "TOTAL LIABILITIES" on a combined consolidated
balance sheet of Tastemaker and Tastemaker B.V. determined and prepared in
accordance with GAAP applied on a basis consistent with the practices and
methodologies used in preparing the December 31, 1995 audited combined
consolidated balance sheet of Tastemaker and Tastemaker B.V.
1.1.63 Long-Term Liabilities Adjustment shall mean, at any time, an
amount equal to either (i) if the Long-Term Liabilities at such time exceed
the Long-Term Liabilities Baseline, the amount by which the Long-Term
Liabilities at such time exceed the Long-Term Liabilities Baseline or (ii)
if the Long-Term Liabilities Baseline exceeds the Long-Term Liabilities at
such time, the amount by which the Long-Term Liabilities Baseline exceeds
the Long-Term Liabilities at such time; provided, however, that if the
Long-Term Liabilities at such time equal the Long-Term Liabilities
Baseline, the Long-Term Liabilities Adjustment shall be zero.
1.1.64 Long-Term Liabilities Baseline shall mean the total liabilities
of the Companies (other than Current Liabilities, the long-term component
of pension liabilities, deferred taxes, the Tastemaker Debt and any Tax
that is the liability or obligation of Tastemaker) which were classified as
a liability under the heading "TOTAL LIABILITIES" on the June 28, 1996
unaudited combined consolidated balance sheet of Tastemaker and Tastemaker
B.V. and their respective subsidiaries, which was an amount equal to Thirty
Eight Million Four Hundred Fifty Thousand Twenty-Four Dollars
($38,450,024.00) less any Tax on such balance sheet that is the liability
or obligation of Tastemaker.
1.1.65 Multiemployer Plan shall have the meaning ascribed to such term
in Section 3.17 of this Agreement.
1.1.66 Net Working Capital shall mean, at any time, an amount equal to
the difference between (i) the amount of Current Assets at such time, and
(ii) the amount of Current Liabilities at such time.
1.1.67 Newco shall have the meaning ascribed to such term in Recital E
above.
1.1.68 Newco Preferred Stock shall mean the preferred shares, $1,000
stated value per share, of Newco with the rights, powers, preferences and
other terms as set forth in APPENDIX A of the Contribution Agreement.
1.1.69 Owners shall mean the collective reference to Hercules and
Mallinckrodt, and "OWNER" shall mean either of Hercules or Mallinckrodt, as
the context requires.
1.1.70 Owners' Knowledge shall mean the actual
18
knowledge of the Specified Officers, and all facts which a particular
Specified Officer reasonably should have known in light of such Specified
Officer's actual responsibilities and duties at the Companies.
1.1.71 Owners' Maximum Liability shall mean an amount equal to twenty
percent (20%) of the Tastemaker Combined and Consolidated Value.
1.1.72 Partners' Representatives shall mean X.X. Xxxxxx, R.J.A.
Fraser, X.X. Xxxxxxx and X.X. Xxxxx.
1.1.73 Partnership Agreement shall mean the Amended and Restated U.S.
Partnership Agreement dated February 4, 1997 among F&F, HFI and HCI and
relating to Tastemaker.
1.1.74 PBGC shall have the meaning ascribed to such term in Section
3.17 of this Agreement.
1.1.75 PBO Adjustment shall have the meaning ascribed to such term in
Section 2.7 of this Agreement.
1.1.76 PBO Plan shall have the meaning ascribed to such term in
Section 2.7 of this Agreement.
1.1.77 Pinnacle shall have the meaning ascribed to such term in
Section 3.1 of this Agreement.
1.1.78 Plan shall have the meaning ascribed to such term in Section
3.17 of this Agreement.
1.1.79 Pre-Closing Tax Period shall have the meaning ascribed to such
term in the Tax Annex.
1.1.80 Short Period shall have the meaning ascribed to such term in
the Tax Annex.
1.1.81 Specified Officers shall mean Xxxxxxx X. Xxxxx (President and
Chief Executive Officer), Xxxxxx X. Xxxx (Vice President and General
Manager, Asia Pacific), Xxxxxxx X. Xxxxxx, Ph.D. (Vice President, Research
and Development), Xxxxx X. Xxxxx (Vice President, General Counsel and
Secretary), Xxxx X. Xxxxx (Vice President and Chief Financial Officer),
Tadanao Naganuma (General Manager, Japan), Xxxxxx X. Xxxxxxxxxx (Vice
President and General Manager, Americas), Xxxxxx X. Xxxxxxx (Vice
President, Human Resources), R. Xxxxxxx Xxxxxxxx (Vice President and
General Manager, Consolidated Flavor Systems), Xxxxxxx X. Xxxxxx (Vice
President and General Manager, Citrus Specialties), Pieter van de Watering
(Vice President and General Manager, Europe), X.X. Xxxxxx (Tastemaker
Partners' Representative), R.J.A. Fraser (Tastemaker Partners'
Representative), X.X. Xxxxxxx (Tastemaker Partners' Representative), X.X.
Xxxxx (Tastemaker Partners' Representative), Angel Xxxxx Xxxxxx
19
(Managing Director, Tastemaker S.A.), Xxxxxx X. Xxxxxxxx (Treasurer,
Tastemaker Canada, Inc., Tastemaker, Inc. and Cocoa Trading and Transport
Company, and Assistant Treasurer, Tastemaker Trading Sales Corporation),
Xxxxxxxx Xxxxxx (General Manager, Tastemaker S.A. de C.V.), Xxxx X. Xxxxxxx
(Director, Tastemaker Holdings Limited and Tastemaker Limited (U.K.)),
Xxxxxxx X. Xxxxxxx (President and Chairman of the Board, Tastemaker, Inc.
and Cocoa Trading and Transport Company), Xxxxxxx X. Xxxx (Assistant
Treasurer, Tastemaker Trading Sales Corporation), Xxxxxx X. Xxxxxx
(Assistant Treasurer, Tastemaker Trading Sales Corporation), and Xxxxx X.
Xxxxx (Director, Tastemaker Pty. Ltd. and Tastemaker Limited (New
Zealand)).
1.1.82 SPHN shall have the meaning ascribed to such term in Section
7.6 hereof.
1.1.83 Tastemaker B.V. Current Assets shall mean, as of any time, all
items, excluding deferred taxes, which would be classified as a current
asset under the heading "CURRENT ASSETS" on a consolidated balance sheet of
Tastemaker B.V. determined and prepared in accordance with the customary
accounting practices, procedures and policies of Tastemaker B.V. used in
connection with its regularly prepared internal financial statements.
1.1.84 Tastemaker B.V. Current Liabilities shall mean, as of any time,
all items, excluding deferred taxes, which would be classified as a current
liability under the heading "CURRENT LIABILITIES" on a consolidated balance
sheet of Tastemaker B.V. determined and prepared in accordance with the
customary accounting practices, procedures and policies of Tastemaker B.V.
used in connection with its regularly prepared internal financial
statements.
1.1.85 Tastemaker B.V. Long-Term Liabilities shall mean, at any time,
the liabilities of Tastemaker B.V. (other than the Tastemaker B.V. Current
Liabilities, the long-term component of pension liabilities and deferred
taxes) which would be classified as a liability under the heading "TOTAL
LIABILITIES" on a consolidated balance sheet of Tastemaker B.V. determined
and prepared in accordance with the customary accounting practices,
procedures and policies of Tastemaker B.V. used in connection with its
regularly prepared internal financial statements.
1.1.86 Tastemaker B.V. Long-Term Liabilities Adjustment shall mean, at
any time, an amount equal to either (i) if the Tastemaker B.V. Long-Term
Liabilities at such time exceed the Tastemaker B.V. Long-Term Liabilities
Baseline, the amount by which the Tastemaker B.V. Long-Term Liabilities at
such time exceeds the Tastemaker B.V. Long-Term Liabilities Baseline or
(ii) if the Tastemaker B.V. Long-Term Liabilities Baseline exceeds the
Tastemaker B.V. Long-Term Liabilities at such time, the amount by which the
Tastemaker B.V. Long-Term Liabilities Baseline exceeds the Tastemaker B.V.
20
Long-Term Liabilities at such time; provided, however, that if the
Tastemaker B.V. Long-Term Liabilities at such time equal the Tastemaker
B.V. Long-Term Liabilities Baseline, the Tastemaker B.V. Long-Term
Liabilities Adjustment shall be zero.
1.1.87 Tastemaker B.V. Long-Term Liabilities Baseline shall mean the
total liabilities of Tastemaker B.V. (other than the Tastemaker B.V.
Current Liabilities, the long term component of pension liabilities and
deferred taxes) which were be classified as a liability under the heading
"TOTAL LIABILITIES" on the June 28, 1996 unaudited consolidated balance
sheet of Tastemaker B.V., which was an amount equal to Five Million Eight
Hundred Sixty Thousand Dollars ($5,860,000.00).
1.1.88 Tastemaker B.V. Subsidiary shall mean Tastemaker S.A., a
limited liability company organized and existing under the laws of Spain.
1.1.89 Tastemaker B.V. Working Capital shall mean, at any time, an
amount equal to the difference between (i) the amount of Tastemaker B.V.
Current Assets at such time, and (ii) the amount of Tastemaker B.V. Current
Liabilities at such time.
1.1.90 Tastemaker B.V. Working Capital Adjustment shall mean, at any
time, an amount equal to either (i) if the Tastemaker B.V. Working Capital
at such time exceeds the Tastemaker B.V. Working Capital Baseline, the
amount by which the Tastemaker B.V. Working Capital at such time exceeds
the Tastemaker B.V. Working Capital Baseline, or (ii) if the Tastemaker
B.V. Working Capital Baseline exceeds the Tastemaker B.V. Working Capital
at such time, the amount by which the Tastemaker B.V. Working Capital
Baseline exceeds the Tastemaker B.V. Working Capital at such time;
provided, however, that if the Tastemaker B.V. Working Capital at such time
equals the Tastemaker B.V. Working Capital Baseline the Tastemaker B.V.
Working Capital Adjustment shall be zero.
1.1.91 Tastemaker B.V. Working Capital Baseline shall mean the
Tastemaker B.V. Working Capital on the June 28, 1996 unaudited consolidated
balance sheet of Tastemaker B.V., which was an amount equal to Nine Million
Two Hundred Twenty-One Thousand One Hundred Ninety-Two Dollars
($9,221,192.00).
1.1.92 Tastemaker B.V. Value shall mean an amount equal to
$150,000,000 and (A) either (i) increased by the Tastemaker B.V. Working
Capital Adjustment, if the Tastemaker B.V. Working Capital as of the
Adjustment Time
21
exceeds the Tastemaker B.V. Working Capital Baseline or (ii) decreased by
the Tastemaker B.V. Working Capital Adjustment, if the Tastemaker B.V.
Working Capital Baseline exceeds the Tastemaker B.V. Working Capital as of
the Adjustment Time, and (B) either (i) decreased by the Tastemaker B.V.
Long- Term Liabilities Adjustment if the Tastemaker B.V. Long-Term
Liabilities as of the Adjustment Time exceed the Tastemaker B.V. Long-Term
Liabilities Baseline, or (ii) increased by the Tastemaker B.V. Long-Term
Liabilities Adjustment if the Tastemaker B.V. Long-Term Liabilities
Baseline exceeds the Tastemaker B.V. Long-Term Liabilities as of the
Adjustment Time.
1.1.93 Tastemaker Combined and Consolidated Value shall mean an amount
equal to One Billion One Hundred Ninety Million Dollars
($1,190,000,000.00).
1.1.94 Tastemaker Debt shall mean the amount of principal and accrued
but unpaid interest, fees and other costs outstanding under the
$600,000,000 Credit Agreement dated January 24, 1997.
1.1.95 Tastemaker Subsidiaries shall mean the collective reference to
those entities set forth on APPENDIX A hereto, other than Tastemaker B.V.
and the Tastemaker B.V. Subsidiary, and "TASTEMAKER SUBSIDIARY" shall mean
any one of the Tastemaker Subsidiaries.
1.1.96 Tax shall have the meaning ascribed to such term in the Tax
Annex.
1.1.97 Tax Annex shall mean and refer to those covenants, procedures,
controls and other provisions set forth on APPENDIX D attached hereto.
1.1.98 Tax Loss shall have the meaning ascribed to such term in the
Tax Annex.
1.1.99 TFI shall have the meaning ascribed to such term in Recital D
of this Agreement.
1.1.100 Transaction Documents shall mean the collective reference to
this Agreement, the Hercules Transaction Agreement and the Contribution
Agreement.
1.1.101 Transition Team Protocol shall mean and refer to those
provisions set forth in APPENDIX E attached hereto, as referred to in
Sections 5.1, 5.3, 5.8 and 6.1 below.
1.1.102 VUT shall have the meaning ascribed to such term in Section
2.7 of this Agreement.
1.1.103 Working Capital Adjustment shall mean, at any time, an amount
equal to either (i) if the Net Working Capital at such time exceeds the
Working Capital Baseline,
22
the amount by which the Net Working Capital at such time exceeds the
Working Capital Baseline, or (ii) if the Working Capital Baseline exceeds
the Net Working Capital at such time, the amount by which the Working
Capital Baseline exceeds the Net Working Capital at such time; provided,
however, that if the Net Working Capital at such time equals the Working
Capital Baseline the Working Capital Adjustment shall be zero.
1.1.104 Working Capital Baseline shall mean the Net Working Capital of
the Companies on the June 28, 1996 unaudited combined consolidated balance
sheet of Tastemaker and Tastemaker B.V., which was an amount equal to
Seventy-Seven Million Seven Hundred Six Thousand Nine Hundred Thirteen
Dollars ($77,706,913.00) less any Tax on such balance sheet that is a
liability or obligation of Tastemaker.
1.2 Accounting Terms. Accounting terms used in this Agreement and not
otherwise defined shall have the meanings ascribed thereto under GAAP.
1.3 Construction. Unless the context clearly indicates to the contrary,
words singular or plural in number shall be deemed to include the other and
pronouns having a neuter, masculine or feminine gender shall be deemed to
include and refer to any and all genders. Whenever the terms "herein,"
"hereunder," or words of like import are used in this Agreement, the intended
reference is to the entire Agreement and not to the clause, sentence, section or
subsection in which such word appears.
1.4 Captions and Headings. The captions and headings in this Agreement are
inserted for convenience of reference only and shall not be considered a part
of, or affect the construction or interpretation of, any provision of this
Agreement.
1.5 No Party Deemed Drafter. This Agreement represents the culmination of
extensive and arms length negotiations among the parties. No party shall be
deemed the drafter of this Agreement, and this Agreement shall not be construed
for or against any party by reason of a particular party being deemed the
drafter.
1.6 Reformation. Should any term or condition of this Agreement be
determined by a court of competent jurisdiction to be unenforceable for any
reason, including, without limitation, violation of statute or public policy,
such provision shall, if possible, be reformed by the parties hereto or, if the
parties cannot agree, by the appropriate court of competent jurisdiction to
comply with applicable legal requirements in a manner that is as close in its
intent and effect to the original provision as possible or, if such reformation
cannot be accomplished, shall be stricken without affecting the validity of any
other term or condition of this Agreement.
1.7 Currency. All references in this Agreement to "DOLLARS"
23
or "$" shall be deemed to mean and refer to United States dollars.
1.8 Materiality. Whenever the terms "material" or "material adverse effect"
are used in Articles 3 and 5 and Section 10.1 of this Agreement, such terms
shall be interpreted and construed as meaning "material" to the business,
assets, condition (financial or otherwise) or results of operations of the
Companies, taken as a whole, or referencing a "material adverse effect" on the
business, assets, condition (financial or otherwise) or results of operations of
the Companies, taken as a whole; provided, however, that any such effect caused
by or resulting from (i) any change in generally accepted accounting principles,
(ii) the announcement or pendency of the transactions contemplated by the
Transaction Documents or the D&F Transaction Agreements, (iii) fluctuations in
the relative values of domestic and/or foreign currencies, or (iv) any change in
economic conditions generally shall not be considered when determining whether a
material adverse effect has occurred. Whenever the terms "material" or "material
adverse effect" are used in Articles 4 and 6 and Section 10.2 of this Agreement,
such terms shall be interpreted and construed as meaning "material" to the
business, assets, condition (financial or otherwise) or as a result of
operations of the Interested Persons and their consolidated subsidiaries, taken
as a whole, or referencing a "material adverse effect" on the business, assets,
condition (financial or otherwise) or as a result of operations of the
Interested Persons and their consolidated subsidiaries, taken as a whole;
provided, however, that any such effect caused by or resulting from (i) any
change in generally accepted accounting principles, (ii) the announcement or
pendency of the transactions contemplated by the Transaction Documents or the
D&F Transaction Agreements, (iii) fluctuations in the relative values of
domestic and/or foreign currencies, or (iv) any change in economic conditions
generally shall not be considered when determining whether a material adverse
effect has occurred.
2. THE DESIGNATED TRANSACTIONS, F&F TRANSACTION, HERCULES TRANSACTION AND
MALLINCKRODT TRANSACTION
2.1 Designated Transactions. Subject and pursuant to the
terms and conditions of the Designated Transaction Agreements, Tastemaker shall
transfer to the Designated Buyers the assets specified in the Designated
Transaction Agreements in exchange for the consideration payable to Tastemaker,
as provided in APPENDIX I hereto. Tastemaker shall be solely responsible for all
covenants, representations, warranties, liabilities and obligations of
Tastemaker under the Designated Transaction Agreements, and neither Mallinckrodt
nor Hercules shall have any responsibilities, liabilities or obligations under
the Designated Transaction Agreements. Each of Roche, GRI, Hercules and
Mallinckrodt acknowledges and agrees that in entering into, and consummating the
transactions contemplated by, and after the consummation of the transactions
contemplated by, the Designated
24
Transaction Agreements, the Interested Persons, on behalf of themselves and the
Designated Buyers, and the Owners, on behalf of themselves and F&F and
Tastemaker, are relying upon, and are entitled to rely upon, the
representations, warranties and covenants of Roche, GRI, Hercules and
Mallinckrodt set forth in this Agreement.
2.2 F&F Transaction. Subject and pursuant to the terms and conditions of
the F&F Transaction Agreement, F&F shall transfer to GRI, and GRI shall acquire,
F&F's forty-nine and one-half percent (49.5%) interest in Tastemaker B.V. in
exchange for the consideration payable to F&F by GRI as provided in the F&F
Transaction Agreement. Except as expressly provided in Section 5.5 of the
Contribution Agreement, F&F shall be solely responsible for all covenants,
representations, warranties, liabilities and obligations of F&F under the F&F
Transaction Agreement, and neither Mallinckrodt nor Hercules shall have any
responsibilities, liabilities or obligations under the F&F Transaction
Agreement. Each of Roche, GRI, Hercules and Mallinckrodt acknowledges and agrees
that in entering into, and consummating the transactions contemplated by, and
after the consummation of the transactions contemplated by, the F&F Transaction
Agreement, GRI and Mallinckrodt, on behalf of itself and F&F, are relying upon,
and are entitled to rely upon, the representations, warranties and covenants of
Roche, GRI, Hercules and Mallinckrodt set forth in this Agreement.
2.3 Hercules Transaction. Subject and pursuant to the terms and conditions
of this Agreement and the Hercules Transaction Agreement, Hercules shall cause
HNBV to transfer to GRI, and GRI shall acquire, HNBV's forty-nine and one-half
percent (49.5%) interest in Tastemaker B.V. in exchange for the consideration
payable to HNBV by GRI as provided in the Hercules Transaction Agreement.
Concurrently with the execution of this Agreement, Hercules, GRI and Roche shall
execute and deliver, and Hercules shall cause HNBV to execute and deliver, the
Hercules Transaction Agreement. Hercules and HNBV shall be solely responsible
for all covenants, representations, warranties, liabilities and obligations of
Hercules and HNBV under the Hercules Transaction Agreement, and Mallinckrodt
shall have no responsibilities, liabilities or obligations under the Hercules
Transaction Agreement.
2.4 Mallinckrodt Transaction. Subject and pursuant to the terms and
conditions of this Agreement and the Contribution Agreement, Mallinckrodt shall
contribute to Newco one hundred percent (100%) of the issued and outstanding
capital stock of F&F and shall receive Newco Preferred Stock and (if applicable)
cash as provided in the Contribution Agreement. Concurrently with the execution
of this Agreement, Mallinckrodt and the Interested Persons shall execute and
deliver, and the Interested Persons shall cause Newco to execute and deliver,
the Contribution Agreement. Mallinckrodt shall be solely responsible for all
covenants, representations, warranties, liabilities and obligations of
Mallinckrodt under the Contribution Agreement, and
25
Hercules shall have no responsibilities, liabilities or obligations under the
Contribution Agreement.
2.5 Consideration. On the Closing Date, the Interested Persons shall make,
and shall cause the Designated Buyers and Newco to make, payments and deliveries
to Tastemaker, Tastemaker B.V., F&F, HNBV and Mallinckrodt, in accordance with
the Designated Transaction Agreements, the F&F Transaction Agreement, the
Hercules Transaction Agreement and the Contribution Agreement.
2.6 Determination of Adjusted Aggregate Value and Tastemaker B.V. Value.
The Adjusted Aggregate Value and the Tastemaker B.V. Value shall be determined
in accordance with Sections 2.6.1 and 2.6.2 below.
2.6.1 Adjusted Aggregate Value. Five (5) business days prior to the
Closing Date, the Owners shall cause to be prepared and delivered to each of the
Interested Persons the Owners' good-faith estimate of the amounts of Current
Assets, Current Liabilities and Long-Term Liabilities as of the Adjustment Time,
together with the Owners' calculation of the Estimated Working Capital
Adjustment and the Estimated Long-Term Liabilities Adjustment as of the
Adjustment Time based upon such estimates, which shall be used for purposes of
determining the Estimated Adjusted Aggregate Value as of the Adjustment Time.
Promptly after the Closing Date, the Interested Persons shall engage Coopers &
Xxxxxxx L.L.P. (the "ACCOUNTANTS") to conduct an audit of the Current Assets,
the Current Liabilities and the Long-Term Liabilities as of the Adjustment Time,
and the Interested Persons shall use their best efforts to cause the Accountants
to complete such audit and deliver to each of the Interested Persons and the
Owners within sixty (60) days after the Closing Date the Accountants'
determination of Current Assets, Current Liabilities and Long-Term Liabilities
as of the Adjustment Time, and the Working Capital Adjustment and Long-Term
Liabilities Adjustment as of the Adjustment Time collectively (the "ACCOUNTANTS'
NET DETERMINATION"), together with the certification of the Accountants that the
balances of Current Assets, Current Liabilities and Long-Term Liabilities were
determined in accordance with the terms of this Agreement (the "ACCOUNTANTS'
REPORT"). The fees and expenses of the Accountants in preparing the Accountants'
Report shall be paid one-half by the Owners and one-half by the Interested
Persons. The Interested Persons and the Owners shall have a period of sixty (60)
days following receipt of the Accountants' Report to review the books and
records of the Companies for purposes of determining whether they agree with the
Accountants' Report and the determination of the Working Capital Adjustment, the
Long- Term Liabilities Adjustment, Current Assets, Current Liabilities and
Long-Term Liabilities set forth therein, and the Interested Persons shall give
the Owners and their respective representatives access to the books and records
of the Companies for such purpose. If any party disagrees with either the
Working
26
Capital Adjustment or the Long-Term Liabilities Adjustment determined based upon
the Accountants' Report, such party (whether one or more than one, each a
"DISPUTING PARTY") shall, at or before the end of such sixty (60) day period,
give to all other parties a written notice which shall set forth a detailed
explanation of such Disputing Party's disagreement with the determination of the
Working Capital Adjustment or the Long-Term Liabilities Adjustment set forth in
the Accountants' Reports (or the amounts of Current Assets, Current Liabilities
or Long-Term Liabilities used in the determination thereof), as well as an
amount for each disputed item and a proposal based on such amounts for an amount
that the Disputing Party believes to be more accurate than the Accountants' Net
Determination (a "DISPUTING PARTY'S PROPOSAL"). If both of the Owners or both of
the Interested Persons dispute the Accountants' Report, the Owners or the
Interested Persons, as the case may be, may (but shall not be obligated to)
submit a joint notice of dispute. If no party gives such notice within said
sixty (60) day period, the Working Capital Adjustment and the Long-Term
Liabilities Adjustment determined by the Accountants and set forth in the
Accountants' Report shall be deemed correct and conclusive for purposes of
determining the Adjusted Aggregate Value. If any party timely disputes the
Accountants' determination of either the Working Capital Adjustment or the
Long-Term Liabilities Adjustment (or the amounts of Current Assets, Current
Liabilities or Long-Term Liabilities used in the determination thereof), the
parties shall negotiate in good faith in an attempt to agree upon a resolution
of such dispute for a period of thirty (30) days from the end of such sixty (60)
day review period. If, notwithstanding the good faith efforts of the parties,
the parties are unable to reach agreement upon the Working Capital Adjustment
and the Long-Term Liabilities Adjustment, the items in the Accountants' Report
that are in dispute (and only the disputed items) will be referred for final
binding resolution to the United States national office of KPMG Peat Marwick LLP
or, if KPMG Peat Markwick LLP is unwilling or unable, due to conflicts, to serve
in such capacity, one of the six (6) largest United States certified public
accounting firms which shall be mutually agreed upon by the parties hereto (or
such other internationally recognized accounting firm as is agreed upon by the
parties) and which shall exclude those firms that provide or have provided
accounting services to any of the parties (the "ADJUSTMENT ARBITRATOR"). The
items in dispute shall be determined by the Adjustment Arbitrator in accordance
with the terms and provisions of this Agreement, and the parties agree to use
their best efforts to cause the Adjustment Arbitrator to render its decision
within sixty (60) days after the dispute has been referred to the Adjustment
Arbitrator for resolution. The determination of the Adjustment Arbitrator shall
be final and binding for purposes of determining the amount of Current Assets,
Current Liabilities and Long-Term Liabilities as of the Adjustment Time, and the
resulting Working Capital Adjustment and Long-Term Liabilities Adjustment as of
the Closing Date (collectively, the "FINAL NET DETERMINATION"), and all parties
shall be bound thereby and judgment upon such resolution may be entered in any
court having
27
requisite jurisdiction. The responsibility to pay the total fees and expenses of
the Adjustment Arbitrator for the entire arbitration process described above as
computed after the completion or termination of the arbitration (the "COST OF
ARBITRATION") shall be allocated as follows:
(i) To compute each party's allocation of the Cost of Arbitration,
each party's variance from the Final Net Determination (each a
"DETERMINATION VARIANCE") shall be equal to the Final Net Determination
minus (x) for each Disputing Party, the Accountants' Net Determination,
adjusted by the net sum of the adjustments set forth in such Disputing
Party's Proposal, and (y) for each party that is not a Disputing Party, the
Accountants' Net Determination.
(ii) Each party shall be allocated responsibility to pay the part of
the Cost of Arbitration equal to the Cost of Arbitration multiplied by the
absolute value of such party's Determination Variance divided by the sum of
the absolute values of the Determination Variances of all parties.
(iii) With respect to any fees and expenses of the Adjustment
Arbitrator required to be paid prior to the determination of the Final Net
Determination, the Owners and the Interested Persons shall bear the
payments of such fees and expenses equally; provided that after the Cost of
Arbitration has been finally determined, the parties hereto shall make such
payments to each other as may be necessary to give effect to the allocation
of the Cost of Arbitration determined as set forth in clause (ii).
The parties intend and agree that the procedures set forth in this Section 2.6.1
shall be the sole and exclusive procedures for resolving all disputes concerning
the Working Capital Adjustment and the Long-Term Liabilities Adjustment as of
the Closing Date. Within ten (10) days after the date upon which the Working
Capital Adjustment and the Long-Term Liabilities Adjustment are finally
determined (whether by agreement of the parties, dispute resolution or as a
result of the failure to timely provide a notice required by this Section), the
consideration paid or delivered pursuant to the Contribution Agreement on the
Closing Date shall be adjusted as provided in the Contribution Agreement.
2.6.2 Tastemaker B.V. Value. Five (5) business days prior to the
Closing Date, the Owners shall cause to be prepared and delivered to each of the
Interested Persons the Owners' good faith estimate of the Tastemaker B.V.
Current Assets, Tastemaker B.V. Current Liabilities and Tastemaker B.V.
Long-Term Liabilities as of the Adjustment Time, together with the Owners'
calculation of the Estimated Tastemaker B.V. Value based upon such estimates,
which shall be used for purposes of determining the Estimated Tastemaker B.V.
Value on the Closing Date. Within thirty (30) days after the Closing Date, the
Interested Persons shall prepare and deliver to the Owners the balance sheet of
Tastemaker B.V. as of the Adjustment Time, together with the Interested Persons'
calculation of the Tastemaker B.V. Working Capital Adjustment and the Tastemaker
B.V. Long-Term Liabilities Adjustment, and the resulting
28
Tastemaker B.V. Value. The Owners shall have a period of thirty (30) days
following receipt of such information to review the books and records of
Tastemaker B.V. for purposes of determining whether they agree with the
Interested Persons determination of the Tastemaker B.V. Working Capital
Adjustment and the Tastemaker B.V. Long-Term Liabilities Adjustment, and the
Tastemaker B.V. Value calculated based thereon. If either of the Owners
disagrees with the Tastemaker B.V. Working Capital Adjustment or the Tastemaker
B.V. Long-Term Liabilities Adjustment as determined by the Interested Persons,
such Owner shall, at or before the end of such thirty (30) day review period,
give to the Interested Persons written notice which shall set forth a detailed
explanation of such Owner's disagreement with the Interested Persons
determination of the Tastemaker B.V. Working Capital Adjustment or the
Tastemaker B.V. Long-Term Liabilities Adjustment. If either of the Owners timely
disputes the Interested Persons determination of either the Tastemaker B.V.
Working Capital Adjustment or the Tastemaker B.V. Long-Term Liabilities
Adjustment, the parties shall negotiate in good faith in an attempt to agree
upon a resolution of such dispute for a period of thirty (30) days from the end
of such thirty (30) day review period. If notwithstanding the good faith efforts
of the parties, the parties are unable to reach agreement upon the Tastemaker
B.V. Working Capital Adjustment and the Tastemaker B.V. Long-Term Liabilities
Adjustment, such dispute shall be resolved in accordance with Article 9 of this
Agreement.
2.7 Closing Aggregate Value Adjustment. (a) The Estimated Adjusted
Aggregate Value and the Adjusted Aggregate Value have been reduced by
$10,425,000 (the "PBO ADJUSTMENT").
(b) If the Fries Withdrawal Closing occurs within two days after the
Closing Date, on the date of the Fries Withdrawal Closing, Owners shall cause
the Companies to transfer (whether by operation of law or otherwise), to the
Interested Persons or an Affiliate of the Interested Persons, and at such time
the Interested Persons or an Affiliate of the Interested Persons shall accept
(whether by operation of law or otherwise), sponsorship of each plan, contract,
agreement or statutory program providing for the payment of benefits, within the
meaning of Statement No. 87 of the Financial Accounting Standards Board (each a
"PBO PLAN" and collectively the "PBO PLANS") and shall assume all obligations of
the Companies to provide benefits under such PBO Plans. In consideration of, and
at the same time as such transfer and assumption, Owners shall cause the
Companies to transfer (whether by operation of law or otherwise), to the
Interested Persons or an Affiliate of the Interested Persons any and all assets
(including without limitation all right, title and interest in any trust
agreement, insurance contract or other instrument) held in connection with, set
aside for or specifically dedicated to each PBO Plan ("PLAN ASSETS") (i) the
value of which as of December 31, 1996 in the case of each such PBO Plan listed
on APPENDIX L (other than the plan covered by or under the heading "Holland
(including VUT)" listed on APPENDIX L (the "DUTCH PLAN")) was at least equal to
the value of the assets listed in respect of each such PBO Plan on APPENDIX L
(other than
29
the Dutch Plan) and (ii) with respect to the Dutch Plan, (A) the value of which
shall be, as of the date of transfer to a successor plan established by
Tastemaker B.V., at least equal to 23 million Dutch Guilders, (B) increased by
the earnings attributable to the investment of such assets and by any
contributions by Tastemaker B.V. and its employees to the Dutch Plan in either
case during the period from December 31, 1996 to the date of transfer and (C)
reduced by the losses attributable to the investment of such assets and by any
benefit payments made to or in respect of any employee of any of the Companies
covered by the Dutch Plan as of December 31, 1996 who retired or otherwise
terminated service after December 31, 1996 and prior to the date of transfer.
Interested Persons accept the reduction in the Estimated Adjusted Aggregate
Value and the Adjusted Aggregate Value above and the transfer of the Plan Assets
to the Interested Persons or an Affiliate of the Interested Persons as provided
in this subsection (b), in full settlement of all claims the Interested Persons
or their Affiliates may have against the Owners in respect of funding and asset
values of any of the PBO Plans, and the Interested Persons shall indemnify and
hold harmless the Owners and their respective officers, employees, agents,
directors, subsidiaries, affiliates and representatives from and against any and
all claims relating to the funding status of, or payment obligations under, each
PBO Plan; provided such reductions and such transfer shall in no way release the
Owners from their obligations under Section 3.17; and provided further, that the
Interested Persons expressly do not assume any liability or obligation of the
Owners under or in connection with any PBO Plan other than the obligations of a
PBO Plan sponsor.
2.8 Closing. Subject to the terms and conditions of the D&F Transaction
Agreements and the Transaction Documents, the closing of the transactions
contemplated by the D&F Transaction Agreements and the Transaction Documents
(the "CLOSING") shall occur on March 31, 1997. The Closing shall be held at the
offices of Xxxx, Xxxxxxxxxx & Xxxxxxxxx, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx.
The closing of the transactions contemplated by the Designated Transaction
Agreements shall commence at 10:00 a.m. Eastern Standard Time on the Closing
Date. The closing of the transactions contemplated by the F&F Transaction
Agreement and the Hercules Transaction Agreement shall commence immediately
following the completion of the closing of the transactions contemplated by the
Designated Transaction Agreements. The closing of the transactions contemplated
by the Contribution Agreement shall commence immediately following the
completion of the closing of the transactions contemplated by the Designated
Transaction Agreements, the F&F Transaction Agreement and the Hercules
Transaction Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE OWNERS
The Owners represent and warrant to the Interested Persons as of the date
hereof and, except with respect to any representations and warranties which
expressly provide that they are given as of a particular date, as of the Closing
Date, as follows:
30
3.1 Organization, Standing and Power; Authority of Tastemaker for the
Designated Transaction Agreements. Tastemaker is a general partnership duly
formed and validly existing under the laws of the State of Delaware and has the
requisite power and authority to carry on its business as conducted on the date
hereof. Tastemaker B.V. is a limited liability entity duly organized and validly
existing under the laws of The Netherlands and has the requisite power and
authority to carry on its business as conducted on the date hereof. Except as
set forth in SCHEDULE 3.1 of the Disclosure Schedule, each of the Tastemaker
Subsidiaries is duly organized and validly existing under the laws of the
jurisdiction in which it is organized as set forth on APPENDIX A hereto and has
the requisite power and authority to carry on its business as conducted on the
date hereof. The Tastemaker B.V. Subsidiary is duly organized and validly
existing under the laws of Spain and has the requisite power and authority to
carry on its business as conducted on the date hereof. Pinnacle Flavours &
Chemicals Private Limited is a private company limited by shares, duly organized
and validly existing under the laws of India ("PINNACLE"). Except as set forth
in SCHEDULE 3.1 of the Disclosure Schedule, each of the Companies is duly
qualified to transact business, and is in good standing, in each jurisdiction
where the character of its properties owned or held under lease or the nature of
its activities makes such qualification necessary, except where the failure to
be so qualified would not reasonably be expected to have a material adverse
effect on the Companies. Tastemaker has all requisite power and authority to
enter into each of the Designated Transaction Agreements and to consummate the
transactions contemplated thereby. The execution and delivery of each of the
Designated Transaction Agreements prior to the Closing Date by Tastemaker and
the consummation by Tastemaker on the Closing Date of the transactions
contemplated thereby will have been duly authorized by all necessary action on
the part of Tastemaker. The Designated Transaction Agreements will have been
duly executed and delivered by Tastemaker prior to the Closing Date and
(assuming the due authorization, execution and delivery thereof by the other
parties thereto) will then constitute the valid and binding obligations of
Tastemaker, enforceable against Tastemaker in accordance with their respective
terms.
3.2 Ownership of Tastemaker B.V., Tastemaker Subsidiaries and Tastemaker
B.V. Subsidiary and Pinnacle. Tastemaker B.V. is owned one percent (1%) by
Tastemaker. Tastemaker B.V. is the sole owner of the Tastemaker B.V. Subsidiary
and holds a twenty-four percent (24%) minority shareholding in Pinnacle.
Pinnacle is an investment accounted for under the equity method on the combined
consolidated financial statements of Tastemaker and Tastemaker B.V., and
Tastemaker B.V. does not control or direct the day-to-day operations of
Pinnacle. A true and complete list of all subsidiaries of any of the Companies,
including the ownership of each of the Tastemaker Subsidiaries and the
31
Tastemaker B.V. Subsidiary, accurately described, is on APPENDIX A hereto. There
are no options, warrants, calls, rights or agreements (other than the Designated
Transaction Agreements and the Partnership Agreement): (i) to which Tastemaker
is a party obligating Tastemaker to issue, deliver, sell, repurchase, redeem or
otherwise acquire, cause to be issued, delivered, sold, repurchased, redeemed,
or otherwise acquired, any partnership interests in Tastemaker or obligating
Tastemaker to grant, extend or enter into any such option, warrant, call, right
or agreement; (ii) except as set forth in SCHEDULE 3.2 of the Disclosure
Schedule, to which Tastemaker or any of the Tastemaker Subsidiaries is a party
obligating Tastemaker or any of the Tastemaker Subsidiaries to issue, deliver,
sell, repurchase, redeem or otherwise acquire or cause to be issued, delivered,
sold, repurchased, redeemed, or otherwise acquired, additional shares of capital
stock of or ownership interests in any of the Tastemaker Subsidiaries or
obligating Tastemaker or any of the Tastemaker Subsidiaries to grant, extend or
enter into any such option, warrant, call, right or agreement; (iii) to which
Tastemaker or Tastemaker B.V. is a party obligating Tastemaker or Tastemaker
B.V. to issue, deliver, sell, repurchase, redeem or otherwise acquire or cause
to be issued, delivered, sold, repurchased, redeemed, or otherwise acquired any
additional ownership interest in Tastemaker B.V. or obligating Tastemaker or
Tastemaker B.V. to enter into any such option, warrant, call, right or
agreement; or (iv) to which Tastemaker B.V. or the Tastemaker B.V. Subsidiary is
a party obligating Tastemaker B.V. or the Tastemaker B.V. Subsidiary or Pinnacle
to issue, deliver, sell, repurchase, redeem or otherwise acquire or cause to be
issued, delivered, sold, repurchased, redeemed, or otherwise acquired additional
ownership interests in the Tastemaker B.V. Subsidiary or Pinnacle, or obligating
Tastemaker B.V. or the Tastemaker B.V. Subsidiary or Pinnacle to grant, extend
or enter into any such option, warrant, call, right or agreement. Except as set
forth in SCHEDULE 3.2 of the Disclosure Schedule, and except pursuant to the
transactions contemplated by the Designated Transaction Agreements and the
Partnership Agreement, the interest of Tastemaker in each Tastemaker Subsidiary
as set forth in APPENDIX A hereto is owned by Tastemaker free and clear of all
security interests, liens, claims, pledges, voting rights, charges and
encumbrances of any nature whatsoever. Except as set forth in SCHEDULE 3.2 of
the Disclosure Schedule, and except pursuant to the transactions contemplated by
the Designated Transaction Agreements, the interest of Tastemaker in Tastemaker
B.V. as set forth in APPENDIX A hereto is owned by Tastemaker free and clear of
all security interests, liens, claims, pledges, voting rights, charges and other
encumbrances of any nature whatsoever. Except pursuant to the transactions
contemplated by
32
the Designated Transaction Agreements and except as set forth in SCHEDULE 3.2 of
the Disclosure Schedule, the interest of each Tastemaker Subsidiary in each
other Tastemaker Subsidiary as set forth in APPENDIX A hereto is owned by such
Tastemaker Subsidiary free and clear of all security interests, liens, claims,
pledges, voting rights, charges and other encumbrances of any nature whatsoever.
Except pursuant to the transactions contemplated by the Designated Transaction
Agreements and except as set forth in SCHEDULE 3.2 of the Disclosure Schedule,
the interest of Tastemaker B.V. in the Tastemaker B.V. Subsidiary as set forth
in APPENDIX A hereto and the twenty-four percent (24%) interest of Tastemaker
B.V. in Pinnacle is owned by Tastemaker B.V. free and clear of all security
interests, liens, claims, pledges, voting rights, charges and other encumbrances
of any nature whatsoever.
3.3 Consents and Approvals; No Violation. Except as set forth in SCHEDULE
3.3 of the Disclosure Schedule, the execution and delivery of the Transaction
Documents and the D&F Transaction Agreements do not, and the consummation of the
transactions contemplated thereby and compliance with the provisions thereof
will not, result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
right or benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of any of
the Companies under: (i) any provision of the charter or organizational
documents of any of the Companies, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease, agreement, instrument, permit, concession,
franchise or license by which any of the Companies is bound or any License or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
by which any of the Companies is bound or to which any of their respective
properties or assets is subject, other than, in the case of clauses (ii) and
(iii), any such violations, defaults, rights, liens, security interests, charges
or encumbrances that would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the Companies, and would not
impair the ability of the Owners or any of their respective Affiliates to
perform their obligations under any of the Transaction Documents or the D&F
Transaction Agreements, prevent the consummation by the Owners or any of their
respective subsidiaries of any of the transactions contemplated by any of the
Transaction Documents or the D&F Transaction Agreements or, other than by reason
of any act or omission of the Interested Persons or their respective
subsidiaries, materially and adversely affect the rights and benefits of the
Interested Persons or any of their respective Affiliates under the Transaction
Documents and the D&F Transaction Agreements. No filing, declaration or
registration with, or consent, approval, order or authorization of, any
Governmental Authority is required by, or with respect to, any of the Companies
in connection with the execution and delivery by the Owners, or any of their
respective subsidiaries, as the case may be, of the Transaction Documents and
the D&F Transaction Agreements or the consummation by the Owners, or any of
their respective subsidiaries, as the case may be, of the transactions
contemplated by the Transaction Documents and the D&F Transaction Agreements,
except: (a) in connection, or in compliance, with the provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended, (b) for such
filings, declarations, registrations, consents, approvals, orders and
authorizations as
33
are required from Governmental Authorities in the countries disclosed in
APPENDIX F hereto, and such other filings, declarations, registrations,
consents, approval, orders and authorizations as may be required under the laws
of any other foreign country in which any of the Companies is organized,
conducts any business or owns any property or assets, and (c) for such other
filings, declarations, registrations, consents, approvals, orders and
authorizations, the failure of which to obtain or make would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the Companies and would not impair the ability of the Owners or any of their
respective Affiliates to perform their obligations under any of the Transaction
Documents and the D&F Transaction Agreements, prevent the consummation by the
Owners or any of their respective subsidiaries of any of the transactions
contemplated by any of the Transaction Documents and the D&F Transaction
Agreements or, other than by reason of any act or omission of the Interested
Persons or their respective subsidiaries, materially and adversely affect the
rights and benefits of the Interested Persons under the Transaction Documents
and the D&F Transaction Agreements.
3.4 Financial Statements. The December 31, 1995 audited combined
consolidated financial statements of Tastemaker and Tastemaker B.V. (the "1995
FINANCIAL STATEMENTS") have been prepared in accordance with GAAP and fairly
present the combined consolidated financial position of Tastemaker and
Tastemaker B.V. as at December 31, 1995 and the combined consolidated results of
their operations and their combined consolidated cash flows for the year ended
December 31, 1995. The June 28, 1996 unaudited combined consolidated balance
sheet, income statement and cash flow statement of the Companies previously
delivered to each of the Interested Persons (the "INTERIM FINANCIAL STATEMENTS")
fairly present the combined consolidated financial position of Tastemaker and
Tastemaker B.V. as of June 28, 1996 (subject to reasonable year-end adjustments,
adjustments to conform to GAAP and the absence of footnotes) and have been
prepared in accordance with the customary accounting practices, procedures and
policies of the Companies used in connection with regularly prepared internal
financial statements, which practices, procedures and policies are not
necessarily consistent in all respects with GAAP or the practices, procedures
and policies used in preparing the 1995 Financial Statements. Except as set
forth in SCHEDULE 3.4 of the Disclosure Schedule, since the date of the Interim
Financial Statements, there has been no material adverse change in the financial
condition or operations of the Companies, taken as a whole.
3.5 Liabilities. Except as reflected or reserved against in the 1995
Financial Statements or the Interim Financial Statements (collectively, the
"FINANCIAL STATEMENTS"), or disclosed in the footnotes thereto, or disclosed in
SCHEDULE 3.5 of the Disclosure Schedule, none of the Companies had any
liabilities at the respective dates of such Financial Statements, absolute,
determined, determinable, contingent or otherwise, that
34
would reasonably be expected to have a material adverse effect on the Companies.
3.6 Books and Records. The books and records of the Companies are complete
and accurate in all material respects in accordance with applicable policies of
the Companies.
3.7 Accounts Receivable. All accounts receivable of the Companies reflected
on the agings of accounts receivable included in SCHEDULE 3.7 of the Disclosure
Schedule and all accounts receivable of the Companies recorded on the books of
the Companies since the date of such agings arose out of bonafide transactions
in the ordinary course of business of the Companies.
All accounts receivable of the Companies included in Current Assets as of the
Adjustment Time will have arisen out of bonafide transactions in the ordinary
course of business of the Companies and will then be free and clear of all liens
securing indebtedness of any person or entity other than the Companies.
3.8 Inventory. The inventory of the Companies as reflected in the Interim
Financial Statements was stated therein at the lower of average cost or market,
in the aggregate, and consisted of items substantially all of which are, except
as provided in any inventory reserve, of a quality and quantity useable and
saleable in the ordinary course of business of the Companies. Except pursuant to
the transactions contemplated by the Partnership Agreement and the Designated
Transaction Agreements, all inventory of the Companies is owned free and clear
of all liens securing indebtedness of any person or entity other than the
Companies. Since the date of the Interim Financial Statements, the Companies
have maintained their inventories in the ordinary course of business.
3.9 Absence of Certain Changes or Events. Since December 31, 1995, except
as reflected in the Interim Financial Statements or disclosed in SCHEDULE 3.9 of
the Disclosure Schedule: (i) except for any liabilities incurred in the ordinary
course of business that would be reflected on a balance sheet of the Companies
prepared in accordance with GAAP, consistently applied, none of the Companies
has incurred any liability or obligation (indirect, direct, absolute,
determined, determinable, contingent or otherwise), that has had or would
reasonably be expected to result in a material adverse effect on the Companies;
(ii) none of the Companies has entered into any material oral or written
agreement or other transaction, that is not in the ordinary course of business
and that has had or would reasonably be expected to result in a material adverse
effect on the Companies; (iii) none of the Companies has sustained any damage,
destruction or other loss or interference with its business, assets or
properties from fire, flood, windstorm, accident or other calamity (whether or
not covered by insurance) that has had or that would reasonably be expected to
have a material adverse effect on the Companies; and (iv) none of the Companies
has had an event, occurrence, development or state of
35
circumstances or facts (including, without limitation, the sale of PFW Aroma
Chemicals, previously a subsidiary of Hercules, to Yule Catto & Co. plc) which
has had or would reasonably be expected to have a material adverse effect on the
Companies. As of the date hereof, none of the Specified Officers has notified
any of the Partners' Representatives that he or she intends to resign within one
(1) year after the Closing of the transactions contemplated by the Transaction
Documents. Since December 31, 1995, except as reflected in the Interim Financial
Statements or disclosed in SCHEDULE 3.9 of the Disclosure Schedule, there has,
with respect to the Companies, been no: (i) incurrence, assumption or guarantee
by the Companies of any material indebtedness for borrowed money other than in
the ordinary course of business and in amounts and on terms consistent with past
practices; (ii) creation or other incurrence of any lien on any material asset
of any of the Companies other than in the ordinary course of business consistent
with past practices; (iii) transaction or commitment made, or any contract or
agreement entered into, whether oral or written, by the Companies relating to
their assets or business (including the acquisition or disposition of any
assets) or any relinquishment by the Companies of any contract or other right,
in either case, in excess of $100,000, other than transactions and commitments
for the purchase and sale of inventory, transactions and commitments in the
ordinary course of business and transactions and commitments pursuant to the
Transaction Documents and the D&F Transaction Agreements; (iv) change in any
method of accounting or accounting practice by the Companies; (v) (A)(I)
collective bargaining agreement entered into with any representative of
employees or (II) expiration of any collective bargaining agreement without its
renewal and/or a new collective bargaining agreement having been entered into
and executed with a representative of employees, or (B) as of the date hereof,
(I) written employment agreement providing for annual salary in excess of
$100,000 (or a material amendment of any existing such agreement), (II)
severance or change in control agreement providing compensation or benefits in
excess of $100,000 (or material amendment of any such existing agreement), or
(III) enhanced retirement or deferred compensation arrangement entered into, in
the case of subclauses (I), (II), and (III) to this clause (B), with any officer
or employee or independent contractor of any of the Companies whose annual
salary exceeds $100,000; (vi) (A) grant of any stay bonus to any employee of any
Company which bonus individually exceeds $50,000 (or amendment of any existing
such bonus), (B) implementation of any severance plan, program or policy under
which, if any employee covered by such plan, program or policy were terminated,
such employee would be entitled in the aggregate to more than $100,000 of
benefits; or (C) as of the date hereof, adoption of or change to any stay
incentive or severance program covering a group of not less than twelve (12)
employees of the Companies; (vii) material change in compensation payable to any
employee of any of the Companies whose annual salary is in excess of $100,000
pursuant to any retirement plan, program or policy, other than in the ordinary
course of business consistent with past practice; (viii) as of
36
the date hereof, labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Companies, which employees were not subject to a collective
bargaining agreement on December 31, 1995, or any lockouts, strikes, slowdowns,
work stoppages or, as of the date hereof, to the Owners' Knowledge, threats
thereof by or with respect to such employees; (ix) repurchase, redemption or
other acquisition by any of the Companies of any outstanding shares of capital
stock or other securities of, or other ownership interests in, the Companies; or
(x) amendment of any material term of any outstanding security of any Company.
3.10 No Existing Violation, Default, Etc. Except as set forth in SCHEDULE
3.10 of the Disclosure Schedule, none of the Companies is in violation of: (i)
its charter or other organizational documents, (ii) any applicable law,
ordinance or administrative or governmental rule or regulation (including any
such law, ordinance or administrative or governmental rule or regulation
applicable to the production processes or sale by the Companies of their
respective products) or (iii) any order, decree or judgment of any Governmental
Authority having jurisdiction over any of the Companies, except for any
violations that would not reasonably be expected to have or to cause a material
adverse effect on the Companies. SCHEDULE 3.10 of the Disclosure Schedule
includes the policies of the Companies regarding the Foreign Corrupt Practices
Act of 1988, as amended (the "FCPA"), including a description of the means by
which information regarding such policies is disseminated to employees of the
Companies. To the Owners' Knowledge, none of the Companies nor any officer,
director, employee or agent of any of the Companies acting on behalf of the
Companies has made, directly or indirectly, any payment or promise to pay, or
gift or promise to give, or authorized such a promise or gift, of any money or
anything of value, directly or indirectly, to (i) any foreign official (as such
term is defined in the FCPA) for the purpose of influencing any official act or
decision of such official or inducing him to use his influence to affect any act
or decision of a Governmental Authority or (ii) any foreign political party or
official thereof or candidate for foreign political office for the purpose of
influencing any official act or decision of such party, official or candidate or
inducing such party, official or candidate to use its influence to affect any
act or decision of a foreign government or agency or subdivision thereof, in the
case of both (i) and (ii) in order to assist any of the Companies to obtain or
retain business or direct business to any of the Companies, under circumstances
which would subject any of the Companies or their respective Affiliates,
officers or directors to liability under the FCPA. Except as set forth in
SCHEDULE 3.10 of the Disclosure Schedule, no event of default or event that, but
for the giving of notice or lapse of time, or both, would constitute an event of
default exists or, upon the consummation of the transactions contemplated by the
Transaction Documents and the D&F Transaction Agreements, will exist on the part
of any of the Companies under any loan or credit agreement,
37
note, bond, mortgage, indenture or guarantee of indebtedness for borrowed money
or any other material lease, agreement or instrument to which any of the
Companies is a party or by which any of the Companies or any of their respective
properties, assets or business is bound, except for any such default or event of
default which would not reasonably be expected to have a material adverse effect
on the Companies.
3.11 Licenses and Permits. Except as disclosed in SCHEDULE 3.11 of the
Disclosure Schedule, none of the Companies is in violation of or default under
any permit, license, franchise or authorization from any Governmental Authority
which is necessary in connection with the ownership, lease or operation of its
properties or the conduct of its business as owned or leased and conducted on
the date hereof (collectively, the "LICENSES"), except to the extent that such
violation or default has not had and would not reasonably be expected to have a
material adverse effect on the Companies. SCHEDULE 3.11 of the Disclosure
Schedule contains a true and complete list of all material Licenses as of the
date hereof, together with the name of the Governmental Authority issuing each
such License; all such material Licenses are valid and in full force and effect;
and to the Owners' Knowledge, no such material License will be revoked,
terminated prior to its normal expiration date or not renewed.
3.12 Environmental Matters. (a) Except as set forth in SCHEDULE 3.12 of the
Disclosure Schedule, (i) there is no liability of any of the Companies under any
Environmental Requirement in existence on the Closing Date, whether absolute,
determined, determinable, contingent or otherwise, and (ii) the properties,
assets and operations of the Companies are in compliance with all applicable
Environmental Requirements, except, in either case, for any such liability or
non-compliance that would not reasonably be expected to have a material adverse
effect on the Companies. Since February 1, 1992, no spill, release, threatened
release or discharge of Hazardous Substances into the Environment which is
required by applicable Environmental Requirements to be reported has occurred at
any of the Companies' facilities or, to the Owners' Knowledge, on any real
property adjacent thereto, and since February 1, 1992, there has been no
corrective action, remediation or clean up required of the Companies by
applicable Environmental Requirements as a consequence of any such spill,
release, threatened release or discharge. All corrective action, remediation or
other clean up activities undertaken by the Companies have been performed, or
are being performed, in accordance in all material respects with all applicable
Environmental Requirements. Each of the Companies has discharged in all material
respects any and all record keeping and reporting requirements applicable to it
pursuant to all applicable Environmental Requirements and all such reports and
records are complete and correct in all material respects and have been retained
by the Companies for the length of time required by any applicable Environmental
Requirements setting forth document retention requirements. Except as set forth
in SCHEDULE 3.12 of the Disclosure Schedule, none of the operating
38
sites of the Companies or, to the Owners' Knowledge, any property adjacent
thereto, or, to the Owners' Knowledge, any sites used for the disposal of wastes
generated by the Companies have been designated as a "SUPERFUND SITE" or are
otherwise the subject of an order of removal or remedial action for which the
Companies have liability pursuant to the provisions of applicable Environmental
Requirements and there are no conditions or circumstances affecting the
operating sites for the Companies or any property adjacent thereto which, to the
Owners' Knowledge, might reasonably cause them to be designated as a "SUPERFUND
SITE" or render them subject to any such order of removal or remedial action for
which the Companies will have liability pursuant to the provisions of applicable
Environmental Requirements. Except as set forth in SCHEDULE 3.12 of the
Disclosure Schedule, no unresolved notice, notification, demand, request for
information, citation, summons or order has been issued, no pending complaint
has been filed, no unpaid penalty has been assessed and no investigation,
action, claim, suit, proceeding or review is pending, or to the Owners'
Knowledge, threatened by any Governmental Authority with respect to the
Companies and relating to or arising out of any Environmental Requirements that
would reasonably be expected to have a material adverse effect on the Companies,
and to the Owners' Knowledge there is no basis for sending any such notice or
asserting any such claim. Except as set forth in SCHEDULE 3.12 of the Disclosure
Schedule, no polychlorinated biphenyls, radioactive material, lead, lead paint,
asbestos-containing material, incinerator, sump, surface impoundment, lagoon,
landfill, septic, wastewater treatment or other disposal system or underground
storage tank (active or inactive) is present at any property owned, leased or
operated by the Companies in violation of applicable Environmental Requirements,
which violation, individually or in the aggregate, would reasonably be expected
to have a material adverse effect on the Companies. All permits required by
applicable Environmental Requirements and necessary for the operation of the
Companies' businesses or the use of the Companies' assets have been obtained or
have been applied for within the period of time permitted by law, and in either
case are identified in SCHEDULE 3.12 of the Disclosure Schedule, and if already
obtained are in effect on the date hereof in accordance with their terms except
for those which, if not obtained or not in effect, would not have a material
adverse effect on the Companies. Except as set forth in SCHEDULE 3.12 of the
Disclosure Schedule, the Companies are in material compliance with the terms of
such permits, no action or investigation has been taken, commenced or, to the
Owners' Knowledge, threatened by any Governmental Authority or any other persons
to revoke or modify such permits or applications or to enforce the terms of or
take action for violation of such permits, and, to the Owners' Knowledge, there
is no reasonable basis for any such action or investigation. No Specified
Officer possesses any evidence which would lead a reasonable person to believe
that any permits applied for will not be granted or that permits or permit
renewals which have been applied for but have not yet been granted or renewed
will, when issued or as a condition of
39
issuance, require material capital expenditures or materially interrupt the
operations of the Companies in order to bring any subject facility or apparatus
into material compliance with applicable Environmental Requirements. None of the
Companies use the portion of the Xxxxxxx Landfill site in St. Louis, Missouri
which is believed to be included on the National Priorities List for the
treatment, storage or disposal of any waste or material.
(b) The Companies do not own, lease or operate and have not within the past
four (4) years owned, leased or operated any real property in New Jersey or
Connecticut.
3.13 Tax Matters. Except as set forth in SCHEDULE 3.13 of the Disclosure
Schedule, with respect to Taxes and Company Tax Returns: (i) all Company Tax
Returns required to be filed on or prior to the date hereof have been filed when
due in accordance with all applicable laws; (ii) as of the time of filing, or,
if subsequently amended as of the date of such amendment, and to the Owners'
Knowledge, such Company Tax Returns correctly reflected in all material respects
the facts regarding the income, business, assets, operations, activities and
status of the Companies and any other information required to be shown therein;
(iii) all Taxes shown to be due on such Company Tax Returns have been timely
paid, withheld or remitted to the appropriate Governmental Authority or
extensions for payment have been duly obtained; (iv) as of the date hereof, none
of the Companies (and no member of any affiliated, consolidated, combined or
unitary group of which a Company is or has been a member) has waived or granted
any extension of any statute of limitations in respect of any Company Tax
Returns or Taxes; (v) as of the date hereof, there is no audit, dispute, claim,
action, proceeding or investigation pending or, to the Owners' Knowledge,
threatened against or with respect to any Company with respect to any Tax, which
audit, dispute, claim, action, proceeding or investigation, if determined
adversely, would reasonably be expected, in combination with any such audits,
disputes, claims, actions, proceedings or investigations, to have a material
adverse effect on the Companies; (vi) as of the date hereof, none of the
Companies is delinquent in the payment of any Tax, requested any extension of
time within which to file any Company Tax Return and has not yet filed such
Return, and all deficiencies asserted or assessments made as a result of any
audit by a Governmental Authority of a Company Tax Return have been paid in
full; and (vii) there are no requests for rulings or determinations in respect
of any Tax pending between any Governmental Authority and any Company.
3.14 Orders, Litigation, Etc. Except as listed on SCHEDULE 3.14 of the
Disclosure Schedule, there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Authority against any of the Companies or
any of their properties, assets or businesses that would reasonably be expected
to have a material adverse effect on the Companies. Except as listed on SCHEDULE
3.14 of the Disclosure Schedule, there are no private or governmental actions,
suits or claims or legal, administrative or arbitration proceedings or
40
investigations pending against or, to the Owners' Knowledge, threatened against
or affecting, any of the Companies or any of their properties, assets or
businesses that would reasonably be expected to have a material adverse effect
on the Companies. There are no actions, suits or claims or legal, administrative
or arbitration proceedings or investigations pending against or, to the Owners'
Knowledge, threatened against or affecting, any of the Companies or any of their
properties, assets or businesses relating to the transactions contemplated by
the Transaction Documents, the D&F Transaction Agreements or the Fries
Withdrawal Documents.
3.15 Labor Matters. Except as set forth in SCHEDULE 3.15 of the Disclosure
Schedule, none of the Companies has any labor contracts, collective bargaining
agreements or material consulting agreements with any persons employed by or
otherwise performing services primarily for any of the Companies (collectively,
the "BUSINESS PERSONNEL") or any representative of any Business Personnel.
Except as listed on SCHEDULE 3.15 of the Disclosure Schedule, since February 1,
1992, none of the Companies has engaged in any unfair labor practice with
respect to Business Personnel that is material to the Companies, and there is no
unfair labor practice complaint pending against any of the Companies with
respect to Business Personnel that is material to the Companies. There is no
labor strike, dispute, slowdown or stoppage pending against or, to the Owners'
Knowledge, threatened against or affecting, any of the Companies that would
reasonably be expected to have a material adverse effect on the Companies, and
none of the Companies has experienced any work stoppage or other material labor
difficulty involving its employees during the last four (4) years that has had
or would reasonably be expected to have a material adverse effect on the
Companies. Except as listed on SCHEDULE 3.15 of the Disclosure Schedule, the
Companies have been since February 1, 1992, and currently are in material
compliance with the requirements of all applicable labor and employment laws,
rules and regulations. Except as disclosed on SCHEDULE 3.15 of the Disclosure
Schedule, none of the Companies is engaged in negotiations or discussions with
any labor or trade union or works council regarding amendment of any collective
bargaining agreement or changes to any retirement, welfare or severance plan.
3.16 Contracts. SCHEDULE 3.16 of the Disclosure Schedule contains a list as
of the date hereof of all contracts (other than purchase orders and sales orders
with customers and suppliers of the Companies) to which any of the Companies is
a party or by which any of the Companies or its respective properties is bound
which (i) provides for the payment or receipt by the Companies of $100,000 or
more in any given 12-month period, (ii) prohibits the Companies from engaging in
their respective normal businesses in any geographic location or (iii) prohibits
the Companies from competing with any person or entity.
The contracts listed on SCHEDULE 3.16 of the Disclosure Schedule
41
also include: (i) as of the date hereof, any lease (whether of real or personal
property) providing for payment or receipt by any of the Companies of $100,000
or more in any given 12-month period; (ii) as of the date hereof, any agreement
for the purchase of equipment or other capital assets that provides for payments
by any of the Companies of $100,000 or more in any given 12-month period; (iii)
as of the date hereof, any agreement providing for the sale by any of the
Companies of equipment or other capital assets that provides for annual payments
to any of the Companies of $100,000 or more in any given 12-month period; (iv)
any partnership, joint venture or other similar agreement or arrangement to
which any of the Companies is a party, other than joint product development
arrangements with customers; (v) as of the date hereof, any agreement other than
the Transaction Documents and the D&F Transaction Agreements relating to the
acquisition or disposition of any business by any of the Companies (whether by
merger, sale of stock, sale of assets or otherwise); (vi) as of the date hereof,
any agreement relating to indebtedness for borrowed money or the deferred
purchase price of property to which any of the Companies is a party (in either
case, whether incurred, assumed, guaranteed or secured by any asset), except any
such agreement with an aggregate outstanding principal amount not exceeding
$100,000; and (vii) any agreement or transaction between any of the Companies
and any of the Owners, F&F, HNBV, HFI, HCI or any of their respective Affiliates
(other than the other Companies) involving a matter in excess of $100,000 or
which cannot be terminated by the Interested Persons as of or after the Closing
with thirty (30) days or less prior notice without termination payment or
penalty. To the Owners' Knowledge, except as otherwise provided in SCHEDULE 3.16
of the Disclosure Schedule and subject to normal expiration or termination as
provided in such contracts, each contract disclosed in SCHEDULE 3.16 of the
Disclosure Schedule is a valid and binding agreement of the respective Company,
and is in full force and effect, except as any of the foregoing may be limited
by the bankruptcy or insolvency of any other party thereto or the application by
a court of appropriate jurisdiction of any equitable principles. Except as
provided in SCHEDULE 3.16 of the Disclosure Schedule, none of the Companies is
in default or breach in any material respect under the terms of any contract
described on such SCHEDULE 3.16. True and complete copies of all contracts
listed on SCHEDULE 3.16 of the Disclosure Schedule have been made available to
each of the Interested Persons, except as set forth in SCHEDULE 3.16 of the
Disclosure Schedule.
3.17 Employee Benefits. SCHEDULE 3.17 of the Disclosure Schedule contains
listings of each Plan (as hereinafter defined).
True and complete copies of all of such Plans (and if applicable related trust
agreements) together with the most recent annual reports (Form 5500 including,
if applicable, Schedule B thereto) and the most recent actuarial valuation
report prepared in connection with any Plan, have been made available to the
Interested Persons. No Plan is maintained in connection with any trust described
in Section 501(c)(9) of the Code. Each Plan
42
complies in all material respects with the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), the Code and all other applicable laws and
administrative or governmental rules and regulations. No "REPORTABLE EVENT"
(within the meaning of Section 4043 of ERISA) has occurred with respect to any
Plan (other than with respect to the transactions contemplated by the
Transaction Documents, the D&F Transaction Agreements, the Fries Withdrawal and
the Fries Withdrawal Documents). As of the date of this Agreement, no Company is
a contributing sponsor described in 4043(b)(1) of ERISA. No condition exists
which would subject any of the Companies or any of their ERISA Affiliates (as
hereinafter defined) to any fine under Section 4071 of ERISA; none of the
Companies, nor any of their ERISA Affiliates, has withdrawn from any Plan or
Multiemployer Plan (as hereinafter defined) or has taken, or is currently
considering taking, any action to do so; and no action has been taken, or is
currently being considered, by any of the Companies or any of their ERISA
Affiliates to terminate any Plan subject to Title IV of ERISA. None of the
Companies nor any ERISA Affiliate of any of them has engaged in, or is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA. No condition exists that (i)
could constitute grounds for termination by the PBGC of any employee benefit
plan that is subject to Title IV of ERISA that is established, maintained or
contributed to by any of the Companies or any of their ERISA Affiliates or (ii)
presents a material risk of complete or partial withdrawal from any
Multiemployer Plan (as hereinafter defined), which could result in any of the
Companies or any of the Interested Persons or any ERISA Affiliate of any of them
incurring a withdrawal liability within the meaning of Section 4201 of ERISA.
The assets of the Companies are not now, nor will they solely because of the
mere passage of time be, subject to any lien imposed under Code Section 412(n)
by reason of a failure of any of the Owners or the Companies or any ERISA
Affiliate of any of them to make timely installments or other payments required
under Code Section 412. No Plan, nor any trust created thereunder, has incurred
any "ACCUMULATED FUNDING DEFICIENCY" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived. There are no actions, suits or
claims pending or, to the Owners' Knowledge, threatened (other than routine
claims for benefits) with respect to any Plan which would reasonably be expected
to have a material adverse effect on the Companies. None of the Companies nor
any of their ERISA Affiliates has incurred or, to the Owners' Knowledge, would
reasonably be expected to incur any liability material to the Companies under or
pursuant to Title IV of ERISA or Section 4971 of the Code. No prohibited
transactions described in Section 406 of ERISA or Section 4975 of the Code have
occurred which would reasonably be expected to result in liability material to
the Companies. All Plans that are intended to be qualified under Section 401(a)
of the Code have received a favorable determination letter as to such
qualification from the Internal Revenue Service, and to the Owners' Knowledge,
no event has occurred, either by reason of any action or failure to act, which
would cause the loss of any such qualification. To the Owners'
43
Knowledge, there is no reason why any Plan is not so qualified in operation.
None of the Companies is a party, contributes or within the past six years has
contributed, to a multiemployer plan, as defined in Sections 3(37) and
4001(a)(2) of ERISA. None of the Companies contributes to, or has within the
past six years contributed to a single-employer plan within the meaning of
Section 4001(a)(15) which has two or more contributing sponsors, as defined in
Section 4001(a)(13), at least two of whom are not under common control, within
the meaning of ERISA. The Companies have complied in all material respects with
the health care continuation requirements of Part 6 of Title I of ERISA to the
extent applicable. Except as disclosed on SCHEDULE 3.17 of the Disclosure
Schedule, the execution and delivery of the Transaction Documents and the D&F
Transaction Agreements do not, and the consummation of the transactions
contemplated thereby and compliance with the provisions thereof will not, result
in an increase in the amount of compensation or benefits or accelerate the
vesting or timing of payment of any compensation or benefits payable by any of
the Companies to any Plan, Benefit Arrangement (as defined below), International
Plan (as defined below) or to any employee of any of the Companies. SCHEDULE
3.17 of the Disclosure Schedule contains listings of each Benefit Arrangement
(as hereinafter defined) existing as of the date hereof. True and complete
copies or descriptions of each Benefit Arrangement (and, if applicable, related
trust agreements) and all amendments thereto have been made available to the
Interested Persons. Each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations and has been maintained in
good standing with applicable regulatory authorities. All contributions and
payments accrued under each Plan and Benefit Arrangement, determined in
accordance with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending on the Closing Date, will be
discharged and paid on or prior to the Closing Date to the extent then due or,
to the extent required by GAAP, reflected as a Current Liability as determined
in the calculations related to the Adjusted Aggregate Value. As used in this
Agreement: (i) "PLAN" means an "EMPLOYEE BENEFIT PLAN," as defined in Section
3(3) of ERISA, (other than a Multiemployer Plan) which (i) is subject to any
provision of ERISA, (ii) is established, administered, maintained or contributed
to by any of the Companies or any of their Affiliates and (iii) covers any
employee or former employee of any Company in respect of service with any
Companies or to which any of the Companies or any of their ERISA Affiliates
otherwise may have any liability; (ii) "MULTIEMPLOYER PLAN" means a
"MULTIEMPLOYER PLAN" (as defined in Section 4001(a)(3) of ERISA) to which any of
the Companies or any of their ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability; and (iii) with respect to any
person, "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which is under common control or would be considered a single
employer with such person pursuant to Section 414(b), (c), (m) or (o) of the
Code and the regulations promulgated thereunder or pursuant to Section 4001(b)
44
of ERISA and the regulations promulgated thereunder. "BENEFIT ARRANGEMENT" means
any employment, severance, change in control or similar contract or arrangement
or any plan, policy, fund, program or contract or arrangement providing for
bonus, profit-sharing, stock option, or other stock related rights or other
forms of incentive or deferred compensation, vacation benefits, workers'
compensation or severance benefits that (A) is not a Plan, (B) is entered into,
maintained, administered or contributed to, as the case may be, by any of the
Owners, the Companies or the Affiliates of any of them and (C) covers in respect
of service with any Company any current or former U.S. employee or U.S.
independent contractor of any of the Companies who is or was employed in the
United States. "INTERNATIONAL PLAN" means (I) any written employment agreement
providing for annual salary in excess of $100,000 or any severance or similar
contract or arrangement providing for compensation (including retirement
benefits) in excess of $100,000 that (A) is not a Plan or a Benefit Arrangement
and (B) is entered into between any of the Companies and any current or former
employee, agent or independent contractor of any of the Companies who is
employed by any of the Companies in the Netherlands, the United Kingdom, Mexico,
Japan, Australia, Canada, or Singapore or who while employed by any of the
Companies was employed in the Netherlands, the United Kingdom, Mexico, Japan,
Australia, Canada, or Singapore or (II) any written plan, policy, fund, program,
arrangement, or contract of or with any of the Companies or any of their
Affiliates in respect of service with any of the Companies covering a group of
employees (at least 12 in number) who are employed by any of the Companies in
the Netherlands, the United Kingdom, Mexico, Japan, Australia, Canada, or
Singapore or who while employed by any of the Companies were employed in the
Netherlands, the United Kingdom, Mexico, Japan, Australia, Canada or Singapore;
providing for (A) retirement benefits (including pension, health, medical or
life insurance), but excluding any retirement scheme fund, plan or program (x)
sponsored by any government or (y) providing benefits statutorily mandated under
the laws of the applicable jurisdiction either at the minimum level statutorily
mandated or pursuant to a statute which does not specify a minimum benefit, or
(B) bonus (including post employment bonus), profit sharing, stock option, or
other stock related rights or other forms of incentive or deferred compensation,
vacation benefits, life insurance (including any self insured arrangements),
health or medical benefits, disability benefits, supplemental unemployment
benefits or severance benefits (cumulatively "BENEFITS"), other than any plan,
policy, fund, program, arrangement or contract providing for BENEFITS
statutorily mandated by the laws of the applicable jurisdiction either at the
minimum level statutorily mandated or pursuant to a statute which does not
specify a minimum benefit that (A) is not a Plan or a Benefit Arrangement and
(B) is entered into, maintained, administered, or contributed to by any of the
Sellers, the Companies or the Affiliates of any of them. "PBGC" means the
Pension Benefit Guaranty Corporation. SCHEDULE 3.17 of the Disclosure Schedule
lists each International Plan. True and complete copies of each International
Plan and all
45
amendments thereto have been made available to the Interested Persons. Each
International Plan has been maintained and operated in substantial compliance
with its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations and has been maintained in good standing
with all applicable regulatory authorities. With respect to each International
Plan all necessary or appropriate approvals, qualifications or certifications
have been obtained and no event has occurred or condition exists which would
cause the loss of such approval, qualification or certifications. All
contributions and payments accrued under each International Plan, determined in
accordance with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending on or prior to the Closing Date will
be discharged and paid on or prior to the Closing Date to the extent then due
or, to the extent required by GAAP, reflected as a Current Liability as
determined in the calculation related to the Adjusted Aggregate Value.
3.18 Intellectual Property.
(a) The filed patents, the patent and trademark applications, and the
registered trademarks, servicemarks and copyrights of each of the Companies as
of the date hereof (the "REGISTERED ITEMS") are listed in SCHEDULE 3.18 of the
Disclosure Schedule with an indication as to each, as applicable, of: (i) the
type of such right (i.e., patent, trademark, etc.); (ii) the owner of such
right; and (iii) the jurisdictions by or in which such right has been issued or
registered or in which an application for such issuance or registration has been
filed, including the respective registration or application numbers.
(b) For purposes of this Section 3.18, the proprietary intellectual
property of each of the Companies (other than the Registered Items) necessary
for the conduct of their respective businesses as conducted on the date hereof
shall be referred to as the "ANCILLARY ITEMS." The Registered Items and the
Ancillary Items are collectively referred to as the "INTELLECTUAL PROPERTY."
(c) Except as set forth in SCHEDULE 3.18 of the Disclosure Schedule,
the Companies own or have the right to use all Registered Items, and to the
Owners' Knowledge, the Companies own or have a right to use the Ancillary Items.
(d) Except as set forth in SCHEDULE 3.18 of the Disclosure Schedule,
each Registered Item owned by the Companies is free and clear of all security
interests, liens, claims, pledges, charges or encumbrances of any nature
whatsoever, except for any such security interests, liens, claims, pledges,
charges or encumbrances which would not reasonably be expected to have a
material adverse effect on the Companies.
(e) SCHEDULE 3.18 of the Disclosure Schedule contains a list as of the
date hereof of each license and sub-license agreement (with any of the Companies
as licensor or licensee) covering any Intellectual Property which involves the
payment or receipt by the Companies of in excess of $100,000 of license fees or
royalties per year. Such list specifies the identity of all parties to the
listed license and sublicense agreements and a
46
general description of the subject matter thereof. All of such license
agreements are in full force and effect, and there exists no material default by
any of the Companies under such license agreements.
(f) Except as set forth in SCHEDULE 3.18 of the Disclosure Schedule,
no use by any of the Companies of any of the Registered Items in connection with
the Business as conducted on the date hereof infringes upon, or otherwise
violates, the rights of any person (other than the Interested Persons or their
Affiliates) with respect thereto where such infringement or violation could
reasonably be expected to result in a restriction upon or a termination of the
Companies' right to use such Registered Item. Except as set forth in SCHEDULE
3.18 of the Disclosure Schedule, as of the date hereof, to the Owners' Knowledge
the Companies have not received notice that use by any of the Companies of any
of the Ancillary Items in connection with the Business as conducted on the date
hereof infringes upon, or otherwise violates, the rights of any person (other
than the Interested Persons or their Affiliates) with respect thereto where such
infringement or violation could reasonably be expected to result in a
restriction upon or a termination of the Companies' rights to use such Ancillary
Items.
(g) Except as set forth in SCHEDULE 3.18 of the Disclosure Schedule
and except as may be provided in any license agreement listed on SCHEDULE 3.18,
none of the Intellectual Property that is owned by any of the Companies is
subject to any outstanding judgment, injunction, order, decree or agreement
restricting the use thereof by any of the Companies or restricting the licensing
thereof by the Companies to any person.
(h) Except as set forth in SCHEDULE 3.18 of the Disclosure Schedule,
(i) the Companies have, to the Owners' Knowledge, the exclusive right to use the
Tastemaker name in connection with the Business in any jurisdiction in which the
Companies do business on the date hereof, and (ii) as of the date hereof, the
Companies have not, to the Owners' Knowledge, received any notice of conflict
with respect to the rights of others regarding the use of the name Tastemaker in
connection with the Business.
(i) Except as set forth in SCHEDULE 3.18 of the Disclosure Schedule,
no person, firm or corporation or other business association is, to the Owners'
Knowledge, presently authorized by the Owners or the Companies to use the
Tastemaker name. The Owners have heretofore made available to each of the
Interested Persons copies of any documents listed in SCHEDULE 3.18 of the
Disclosure Schedule.
3.19 Properties. (a) The Companies own or have the right to use all real
and tangible personal property necessary for the conduct of their businesses.
Such property, excluding assets not used in the operations of the Companies, is
in good operating condition and repair, subject to ordinary wear and tear, and
there exist no material restrictions on the right or ability of the Companies to
use such property in the conduct of their respective businesses as conducted on
the date hereof. Except as set forth on SCHEDULE 3.19 to the Disclosure
Schedule, all such
47
property as is owned by the Companies is free and clear of all security
interests, liens, claims, pledges, charges and other encumbrances of any nature
whatsoever, securing indebtedness of any person or entity other than the
Companies, except for any such security interests, liens, claims, pledges,
charges or encumbrances which would not reasonably be expected to have a
material adverse effect on the Companies.
(b) SCHEDULE 3.19 of the Disclosure Schedule contains a true and complete
list of each lease of personal property to which any of the Companies is a party
as of the date hereof, which provides for the payment or receipt by the Company
of any amount in excess of $100,000 per year. All such personal property leases
are in full force and effect, and there exists no material default by any of the
Companies under any such personal property leases. True and complete copies of
all such personal property leases have been made available to each of the
Interested Persons.
(c) All real property owned by any of the Companies as of the date hereof
is described in SCHEDULE 3.19 of the Disclosure Schedule, and none of such real
property is subject to any mortgage which secures debt of any person or entity
other than the Companies. A true and complete list of all leases of real
property by any of the Companies upon which offices staffed with personnel of
the Companies are located or manufacturing operations of the Companies are
conducted as of the date hereof is contained in SCHEDULE 3.19 of the Disclosure
Schedule, all such real property leases are in full force and effect, and there
exists no material default by any of the Companies under any such real property
leases. True and complete copies of all such real property leases have been made
available to each of the Interested Persons. All such real property is suitable
in all material respects for the conduct of the businesses of the Companies as
conducted on the date hereof. To the Owners' Knowledge, none of the structures
on any such owned real property substantially encroaches upon real property of
another person, and no structure of any other person substantially encroaches
upon any of such owned real property.
3.20 Insurance Coverage. SCHEDULE 3.20 of the Disclosure Schedule contains
a true and complete description as of the date hereof of the Companies'
insurance programs covering the assets, properties, operations and activities of
the Companies. Except as disclosed on SCHEDULE 3.20 to the Disclosure Schedule,
there is no material claim by the Companies pending under any policies of
insurance as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or in respect of which such underwriters have
reserved their rights. All premiums payable under all policies of insurance
maintained by the Companies have been paid timely and the Companies have
otherwise complied in all material respects with the terms and conditions of all
such policies. To the Owners' Knowledge, there is no threatened termination of,
or material alteration of coverage under, any policies of insurance maintained
by the Companies.
3.21 Company Brokers. None of the Companies is a party to
48
any agreement providing for the payment of any broker's, finder's or other
similar fee or commission in connection with the execution and delivery of, or
the consummation of the transactions contemplated by, any of the Transaction
Documents or the D&F Transaction Agreements, the Fries Withdrawal or the Fries
Withdrawal Documents.
3.22 Withdrawal Consents and Approvals; No Violation. Assuming the
completion of the closing of the transactions contemplated by the D&F
Transaction Agreements and the Transaction Documents and other than by reason of
any acts or omissions by the Interested Persons and their respective Affiliates
(including, after the Closing, without limitation, F&F) and any events or
occurrences after the Closing not related to any acts or omissions by the Owners
and their respective Affiliates (including, prior to the Closing, without
limitation, F&F), except as set forth in SCHEDULE 3.22 of the Disclosure
Schedule, the exercise on the Closing Date by F&F of the Fries Withdrawal
immediately after completion of the Closing will not, and the consummation of
the Fries Withdrawal Closing immediately after completion of the Closing and
compliance with the provisions of the Partnership Agreement and the Fries
Withdrawal Documents in connection therewith will not, result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to the loss of a material right or benefit under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the properties
or assets of Tastemaker under: (i) the Partnership Agreement, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease, agreement, instrument,
permit, concession, franchise or license by which Tastemaker is bound or License
or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation by which Tastemaker is bound or to which any of its properties or
assets is subject, other than, in the case of clauses (ii) and (iii), any such
violations, defaults, rights, liens, security interests, charges or encumbrances
(A) that are attributable to the Interested Persons or their Affiliates, or (B)
that would not, individually or in the aggregate, reasonably be expected to have
a material adverse effect on Tastemaker, and would not impair the ability of
Tastemaker to perform its obligations under the Partnership Agreement or the
Fries Withdrawal Documents, prevent the consummation by Tastemaker of the Fries
Withdrawal Closing or, other than by reason of any act or omission of the
Interested Persons or F&F or their respective subsidiaries, materially and
adversely affect the rights and benefits of F&F under the Partnership Agreement
or the Fries Withdrawal Documents. Assuming the completion of the closing of the
transactions contemplated by the D&F Transaction Agreements and the Transaction
Documents and other than by reason of any acts or omissions by the Interested
Persons and their respective Affiliates (including, after the Closing, without
limitation, F&F) and any events or occurrences after the Closing not related to
any acts or omissions by the Owners and their respective
49
Affiliates (including, prior to the Closing, without limitation, F&F), no
filing, declaration or registration with, or consent, approval, order or
authorization of, any Governmental Authority is required by, or with respect to,
Tastemaker in connection with the exercise on the Closing Date by F&F of the
Fries Withdrawal immediately after the completion of the Closing or the
consummation of the Fries Withdrawal Closing immediately after the Closing,
except: (a) in connection, or in compliance, with the provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended, (b) for such
filings, declarations, registrations, consents, approvals, orders and
authorizations in the Countries disclosed in APPENDIX G hereto, and such
filings, declarations, registrations, covenants, approvals, orders and
authorizations that may be required under the laws of any other foreign country
in which Tastemaker or any then existing subsidiary of Tastemaker is organized,
conducts any business or owns any property or assets, and (c) for such other
filings, declarations, registrations, consents, approvals, orders and
authorizations (1) that are attributable to the Interested Persons or their
Affiliates, or the ownership of F&F by the Interested Persons or their
Affiliates, or (2) the failure of which to obtain or make would not reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on Tastemaker and would not impair the ability of Tastemaker to perform its
obligations under the Partnership Agreement or the Fries Withdrawal Documents,
prevent the consummation by Tastemaker of the Fries Withdrawal Closing or, other
than by reason of any act or omission of the Interested Persons or F&F or their
respective subsidiaries, materially and adversely affect the rights and benefits
of F&F under the Partnership Agreement or the Fries Withdrawal Documents.
Assuming the completion of the closing of the transactions contemplated by the
D&F Transaction Agreements and the Transaction Documents and other than by
reason of any acts or omissions by the Owners and their respective Affiliates,
including, prior to the Closing, without limitation, F&F, and any event or
occurrence prior to the Closing not related to any acts or omissions by the
Interested Persons and their respective Affiliates, except as disclosed on
SCHEDULE 3.17 of the Disclosure Schedule, the exercise on the Closing Date of
the Fries Withdrawal immediately following the completion of the Closing will
not, and the consummation of the Fries Withdrawal and the transactions
contemplated by the Fries Withdrawal Documents on the Closing Date immediately
following the Closing will not, result in an increase in the amount of
compensation or benefits or accelerate the vesting or timing of payment of any
compensation or benefits payable by any of the Companies to any Plan, Benefit
Arrangement (as defined below), International Plan (as defined below) or to any
employee of any of the Companies, other than any such increase, acceleration,
vesting or changes in timing as are attributable to the Interested Persons or
their Affiliates.
4. REPRESENTATIONS AND WARRANTIES OF THE INTERESTED PERSONS.
The Interested Persons represent and warrant to each of the
50
Owners as of the date hereof and as of the Closing Date as follows:
4.1 Organization, Standing and Power. GRI is a corporation duly organized
and validly existing and in good standing under the laws of Switzerland and has
the requisite power and authority to carry on its businesses as conducted on the
date hereof. Roche is a corporation duly organized and validly existing and in
good standing under the laws of Delaware and has the requisite power and
authority to carry on its businesses as conducted on the date hereof.
4.2 Authority. The Interested Persons have all requisite power and
authority to enter into each of the Transaction Documents and the D&F
Transaction Agreements and to consummate the transactions contemplated thereby.
The execution and delivery of each of the Transaction Documents and the D&F
Transaction Agreements by Roche and/or GRI, as the case may be, and the
consummation by the Interested Persons of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of Roche and/or
GRI, as the case may be. Each of the Transaction Documents and the D&F
Transaction Agreements has been duly executed and delivered by Roche and/or GRI,
as the case may be, and (assuming the due authorization, execution and delivery
thereof by each other party thereto other than the Designated Buyers)
constitutes the valid and binding obligation of Roche and/or GRI, as the case
may be, enforceable against Roche and/or GRI, as the case may be in accordance
with its respective terms. Each of the Designated Buyers has all requisite power
and authority to enter into each of the Designated Transaction Agreements and to
consummate the transactions contemplated thereby. The execution and delivery of
each of the Designated Transaction Agreements prior to the Closing Date by each
of the Designated Buyers that is a party thereto and the consummation by each of
the Designated Buyers on the Closing Date of the transactions contemplated
thereby will have been duly authorized by all necessary action on the part of
each of the Designated Buyers. The Designated Transaction Agreements will have
been duly executed and delivered by each of the Designated Buyers that is a
party thereto prior to the Closing Date and (assuming the due authorization,
execution and delivery thereof by Tastemaker) will then constitute the valid and
binding obligations of each of the Designated Buyers that is a party thereto,
enforceable against each of the Designated Buyers in accordance with their
respective terms.
4.3 Consents and Approvals; No Violation. The execution and delivery of the
Transaction Documents and the D&F Transaction Agreements do not, and the
consummation of the transactions contemplated thereby and compliance with the
provisions thereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material right or benefit under: (i) any provision of the charter or
organizational documents of either of
51
the Interested Persons; (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, agreement, instrument, permit, concession, franchise or
license by which either of the Interested Persons is bound; or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation by which
either of the Interested Persons is bound or to which any of its properties or
assets is subject, other than, in the case of clauses (ii) and (iii), any such
violations, defaults or rights that, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Interested
Persons, and would not impair the ability of either of the Interested Persons to
perform its obligations under any of the Transaction Documents or the D&F
Transaction Agreements, prevent the consummation by either of the Interested
Persons of any of the transactions contemplated by any of the Transaction
Documents or the D&F Transaction Agreements or, other than by reason of any act
or omission of the Owners or their respective Affiliates, materially and
adversely affect the rights and benefits of the Owners under the Transaction
Documents and the D&F Transaction Agreements. No filing, declaration or
registration with, or consent, approval, order or authorization of, any
Governmental Authority is required by, or with respect to, either of the
Interested Persons in connection with the execution and delivery by either of
the Interested Persons of the Transaction Documents or the consummation by
either of the Interested Persons of the transactions contemplated by the
Transaction Documents, except: (a) in connection, or in compliance, with the
provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as
amended; (b) the filing of the certificate of designation of Newco Preferred
Stock with the Secretary of State of the State of Delaware; and (c) for such
filings, declarations, registrations, consents, approvals, orders and
authorizations as are disclosed on APPENDIX F to this Agreement that may be
required under the laws of any foreign country in which any of the Companies is
organized, conducts any business or owns any property or assets.
4.4 Brokers. No broker, investment banker or other person other than X.X.
Xxxxxx & Co., Incorporated, the fees and expenses of which will be paid by the
Interested Persons, is entitled to any broker's, finder's or other similar fee
or commission in connection with the execution and delivery of, or the
consummation of the transactions contemplated by, any of the Transaction
Documents and the D&F Transaction Agreements based on agreements or arrangements
made by the Interested Persons or the Designated Buyers.
4.5 Withdrawal Consents and Approvals; No Violation. Assuming the
completion of the closing of the transactions contemplated by the D&F
Transaction Agreements and the Transaction Documents and other than by reason of
any acts or omissions by the Owners and their respective Affiliates (including
prior to the Closing, without limitation, F&F), and any events or occurrences
prior to the Closing not related to any acts or omissions by the Interested
Persons and their respective Affiliates, the exercise by F&F on the Closing Date
of the Fries
52
Withdrawal immediately after completion of the Closing will not, and the
consummation of the Fries Withdrawal Closing immediately after the Closing and
compliance with the provisions of the Partnership Agreement and the Fries
Withdrawal Documents in connection therewith will not, result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to the loss of a material right or benefit under: (i) any provision of the
charter or organizational documents of either of the Interested Persons or F&F;
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease,
agreement, instrument, permit, concession, franchise or license by which either
of the Interested Persons or F&F is bound; or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation by which either of the Interested
Persons or F&F is bound or to which any of their respective properties or assets
is subject, other than, in the case of clauses (ii) and (iii), any such
violations, defaults or rights that, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Interested
Persons or F&F, and would not impair the ability of F&F to perform its
obligations under the Partnership Agreement or the Fries Withdrawal Documents,
prevent the consummation by F&F of the Fries Withdrawal Closing or, other than
by reason of any act or omission of the Owners or Tastemaker, materially and
adversely affect the rights and benefits of Tastemaker under the Partnership
Agreement and the Fries Withdrawal Documents. Assuming the completion of the
closing of the transactions contemplated by the D&F Transaction Agreements and
the Transaction Documents and other than by reason of any acts or omissions by
the Owners and their respective Affiliates, (including, prior to the Closing,
without limitation, F&F) and any events or occurrences prior to the Closing not
related to any acts or omissions by the Interested Persons and their respective
Affiliates, no filing, declaration or registration with, or consent, approval,
order or authorization of, any Governmental Authority is required by, or with
respect to, either of the Interested Persons or F&F in connection with the
exercise on the Closing Date by F&F of the Fries Withdrawal immediately after
the completion of the Closing or the consummation by F&F of the Fries Withdrawal
Closing immediately after the completion of the Closing, except: (a) in
connection, or in compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976, as amended; and (b) for such filings,
declarations, registrations, consents, approvals, orders and authorizations as
are disclosed on APPENDIX G to this Agreement that may be required under the
laws of any foreign country in which Tastemaker or any of its Subsidiaries is
organized, conducts any business or owns any property or assets, and (c) for
such other filings, declarations, registrations, covenants, approvals, orders
and authorizations the failure of which to obtain or make would not reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on F&F and would not impair the ability of F&F to perform its obligations under
the Partnership Agreement or the Fries Withdrawal Documents, prevent
53
the consummation by F&F of the Fries Withdrawal Closing or, other than by reason
of any act or omission of Tastemaker, materially or adversely affect the rights
and benefits of Tastemaker under the Partnership Agreement or the Fries
Withdrawal Documents.
5. COVENANTS OF THE OWNERS.
5.1 Access to Properties and Records. After the full execution and delivery
hereof until the Closing Date, the Owners shall cause the Companies to give the
officers, employees, attorneys, accountants, contractors and other agents and
representatives of the Interested Persons reasonable access to the Companies'
offices, properties and records in accordance with the Transition Team Protocol.
5.2 Operations. Except as may otherwise be contemplated by the Transaction
Documents and the D&F Transaction Agreements, from the date hereof to the
Closing, the Owners shall cause the Companies to: (i) conduct their respective
operations in compliance with applicable laws and only in the ordinary course,
provided, that the Owners shall be permitted to cause the Companies to declare
and pay dividends and make other distributions from the date hereof until (but
in no event after) the Adjustment Time; (ii) use reasonable best efforts to
maintain their respective properties and facilities in their present condition,
reasonable use and ordinary wear and tear excepted; (iii) use reasonable best
efforts to maintain their respective relationships with customers, suppliers and
key employees; (iv) use reasonable best efforts to obtain any material consents
of non-governmental third parties required in connection with the consummation
of the transactions contemplated by the Transaction Documents, the D&F
Transaction Agreements and, if requested by the Interested Persons, the Fries
Withdrawal Documents; and (v) continue to maintain insurance with coverages,
deductibles and limits which are the same in all respects material to the
Companies as exist on the date hereof. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, the Owners will not
permit the adoption of any change to the Partnership Agreement and will not
permit any of the Companies to: (a) adopt or propose any change in its
certificate of incorporation or bylaws or other similar constituent documents;
(b) merge or consolidate with any other person; or (c) acquire a business of any
other person; (d) sell, lease, license or otherwise dispose of any material
assets or property; or (e) agree or commit to do any of the foregoing; except in
the case of (d) and (e), (A) pursuant to existing contracts or commitments, and
(B) in the ordinary course of business.
5.3 Financial Statements. On or before the Closing Date, the Owners shall
deliver or cause to be delivered to each of the Interested Persons an unaudited
combined consolidated balance sheet, income statement and cash flow statement of
the Companies as at, and for the interim period ending on, the last day of the
most recent accounting month of the Companies prior to the
54
Closing Date for which such statements are available. The statements to be
delivered pursuant to this Section shall be prepared in accordance with the
customary accounting practices, procedures and policies of the Companies used in
connection with regularly prepared internal financial statements, which
practices, procedures and policies will not necessarily be consistent in all
respects with GAAP or the practices, procedures and policies used in preparing
the 1995 Financial Statements. The Interested Persons shall have access to
certain other information customarily prepared by the Companies concerning the
financial condition and results of operations of the Companies in accordance
with the Transition Team Protocol.
5.4 Fees. Except as otherwise agreed by the parties in writing, each of
Hercules and Mallinckrodt shall pay all legal, accounting, financial advisory,
brokerage and finder fees and commissions, filing fees and other similar fees
and expenses incurred by or imposed upon it in connection with the negotiation
and preparation of the Transaction Documents, the D&F Transaction Agreements and
the Fries Withdrawal Documents and the consummation of the transactions
contemplated by the Transaction Documents, the D&F Transaction Agreements, the
Fries Withdrawal and the Fries Withdrawal Documents, and the Interested Persons
shall have no liability of any kind therefor.
5.5 Non-Solicitation of Employees. Each of the Owners agrees that for a
period of three full years from the Closing Date, neither it nor any of its
Affiliates shall solicit the employment of, or the performance of services by,
any current employee of any of the Companies whose employment is not terminated
by the Interested Persons or their respective Affiliates subsequent to the
Closing Date; provided, however, that general solicitations not targeted to
employees of the Companies on the Closing Date shall not be deemed to violate
this Section 5.5.
5.6 Confidentiality. After Closing, the Owners and their Affiliates will
hold, and will use reasonable efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the Companies and the Business, except to the extent that
such information was: (a) previously known on a nonconfidential basis by the
Owners; (b) in the public domain through no fault of the Owners; (c) later
lawfully acquired by the Owners from any source other than one related to the
Owners' prior ownership of the Companies, which source was not bound by any
confidentiality obligation; or (d) disclosed for purposes of litigation
prosecution or defense, Tax return preparation or payment, reporting historical
financial results and other proper business purposes. Notwithstanding anything
in this Section 5.6 to the contrary, the obligation of the Owners and their
Affiliates to hold any such information in confidence shall be satisfied if they
exercise the same care with
55
respect to such information as they would take to preserve the confidentiality
of their own similar information.
5.7 Accounts; Safe Deposit Boxes; Powers of Attorney; Officers and
Directors. The Owners shall provide prior to Closing; (i) a true and correct
list of all bank and savings accounts and safe deposit boxes of the Companies
and those persons authorized to sign thereon; (ii) a true and correct list of
all powers of attorney granted by the Companies for purposes of authorizing
persons not employees of the Companies to withdraw money from bank accounts of
the Companies or to pledge the credit of the Companies; and (iii) a true and
correct list of all officers and directors of each of the Companies.
5.8 Access. Owners agree to make available to, and to cause the Companies
to make available to, the Interested Persons during the period beginning on the
date hereof, and ending on the Closing Date, certain Business Personnel
identified by Interested Person for purposes of discussing with them their role
in the future success of, and the terms of their future employment with, the
combined organization of the Interested Persons, in accordance with the
Transition Team Protocol.
5.9 Resignations. The Owners will deliver to each of the Interested Persons
the resignations of all officers and directors of the Companies who will be
officers, directors or employees of either of the Owners or any of their
respective Affiliates after the Closing Date from their positions with the
Companies on or prior to the Closing Date. The Owners will indemnify the
Interested Persons for any severance or other employee benefit payments
triggered by such resignations.
5.10 Tastemaker B.V. Partnership Election. Prior to the Closing Date,
Hercules and Mallinckrodt shall cause Tastemaker B.V. to make an election
complying with the requirements of Treasury Regulations Section 301.7701-3(c) to
be classified, effective as of a date prior to the Closing Date, as a
partnership for United States federal income Tax purposes.
5.11 Third Party Infringement. Between the date hereof and the Closing
Date, the Owners will promptly notify the Interested Persons of (i) any
infringement by any third party upon the rights of the Companies in or to
Intellectual Property of which the Specified Officers become aware and (ii) any
notice the Specified Officers receive from any third party that the Companies
are or may be infringing upon the intellectual property rights of any third
party.
5.12 Third Party Defaults. Between the date hereof and the Closing Date,
the Owners will promptly notify the Interested Persons of any material default
by any other person or entity, under any agreements of the Companies which are
required by this Agreement to be listed on the Disclosure Schedule.
5.13 Resignations. Between the date hereof and the Closing
56
Date, the Owners shall notify the Interested Persons in the event any of the
Specified Officers notifies any of the Partners' Representatives that he or she
intends to resign within one (1) year after the Closing of the transactions
contemplated by the Transaction Documents.
5.14 Severance and Stay Incentives. From the date hereof until the Closing
Date, the Owners shall give the Interested Persons written notice of (i) the
execution by the Companies of any employment agreement with any single employee
providing for an annual salary of $100,000 or more or providing for any
severance pay or stay incentive of $50,000 or more for any one employee, or (ii)
the adoption of any stay incentive or severance program covering a group of not
less than twelve (12) employees of the Companies.
5.15 Tax Waiver Notification. Between the date hereof and the Closing
Date, the Owners shall notify the Interested Persons in the event (i) the
Companies (or any member of any affiliated, consolidated, combined or unitary
group of which a Company is a member) waives or grants any extension of any
statute of limitations in respect of any Company Tax Returns or Taxes or (ii)
any Company requests any extension of time in which to file any Company Tax
Return.
6. COVENANTS OF THE INTERESTED PERSONS.
6.1 Compliance with Transition Team Protocol. From the date hereof until
the Closing, the Interested Persons shall, and shall cause their officers,
employees, attorneys, accountants, contractors and other agents and
representatives to, comply with the Transition Team Protocol.
6.2 Fees. Except as otherwise agreed by the parties in writing, the
Interested Persons shall pay all legal, accounting, financial advisory,
brokerage and finder's fees and commissions, filing fees and other similar fees
and expenses incurred by or imposed upon the Interested Persons in connection
with the negotiation and preparation of the Transaction Documents, the D&F
Transaction Agreements and the Fries Withdrawal Documents and the consummation
of the transactions contemplated by the Transaction Documents, the D&F
Transaction Agreements, the Fries Withdrawal and the Fries Withdrawal Documents,
and the Owners shall have no liability of any kind therefor.
6.3 Record Retention and Access. For a period of ten (10)
years following the Closing Date, the Interested Persons shall grant each of the
Owners and their respective representatives, upon receipt of reasonable prior
notice from the Owners, access to, and shall make available to each of the
Owners and their respective representatives, all properties, facilities,
documents and correspondence of the Companies existing on the Closing Date,
during regular business hours and upon reasonable prior notice, for purposes of
preparing tax returns and securities filings,
57
prosecution and defense of litigation and all other proper business purposes;
provided that, in connection with such access the Owners will at all times
comply with the Interested Persons' normal visitor safety and security
procedures and requirements. If within such ten (10) year period destruction of
any records, files, documents or correspondence of the Companies is desired
(other than records, files, documents or correspondence which would not normally
be retained in the records of the Companies' record retention policies existing
on the date hereof), the Interested Persons shall not destroy or permit the
destruction of such items without giving thirty (30) days prior written notice
to the Owners, upon which notice the Owners shall have the right to take
possession of such records, files, documents and correspondence.
6.4 Confidentiality. Until such time (if any) as the transactions
contemplated by the Transaction Documents have been consummated, the Interested
Persons shall continue to comply with, and shall be bound by the terms and
conditions of, that certain confidentiality letter dated September 26, 1996,
executed and delivered by Roche, which confidentiality letter is attached hereto
as APPENDIX H and shall be for the benefit of, and enforceable by, without
limitation, each of the Owners.
6.5 Responsibility for D&F Transaction Agreements. The Interested Persons
shall cause their respective subsidiaries and Affiliates to fully and timely
fulfill and perform, and the Interested Persons hereby unconditionally
guarantees the full and timely performance and fulfillment by their subsidiaries
and Affiliates of, all of their respective obligations under the D&F Transaction
Agreements required to be performed or fulfilled by GRI prior to the completion
of the closing of the transactions contemplated by the D&F Transaction
Agreements; provided, however, that upon completion of the closing of the
transactions contemplated by the prior Transaction Agreements (i) the Interested
Persons shall be fully and finally released of all liabilities, responsibilities
and obligations with respect to all representations, warranties, covenants,
agreements and other obligations of their subsidiaries and Affiliates under the
D&F Transaction Agreements, and (ii) no claim may be asserted or maintained
against the Interested Persons with respect to any representation, warranty,
covenant, agreement or other obligation under the D&F Transaction Agreements and
all such claims shall be, and hereby are, forever released, waived and barred.
6.6 Xxxxxxx Landfill Site. The Interested Persons agree that none of the
Companies will use the portion of the Xxxxxxx Landfill site in St. Louis,
Missouri which is believed to be included on the National Priorities List on or
after the Closing Date for the storage, treatment or disposal of any waste or
material.
6.7 Designated Transaction Approvals. To the extent the identity of a
Designated Buyer or information regarding a Designated Buyer is required for
taking, preparing, making and/or
58
filing, or causing to be taken, prepared, made and/or filed, with each
appropriate Governmental Authority, any actions, filings and requests for
approvals, consents, permits, authorizations or waivers that are required from
such Governmental Authority for the consummation of the transactions
contemplated by such Designated Transaction Agreement, GRI shall be responsible
for the same.
7. MUTUAL COVENANTS OF THE OWNERS AND THE INTERESTED PERSONS
7.1 Satisfaction of Conditions. From and after the date hereof, each of
Hercules, Mallinckrodt, Roche and GRI shall use their best efforts (individually
or jointly, as the case may be) to cause all conditions precedent set forth in
Sections 10.1 and 10.2 of this Agreement (as appropriate to each of them) to be
satisfied and fulfilled at the earliest practicable date, to the extent the
satisfaction or fulfillment thereof is its responsibility hereunder or within
its reasonable control. If any event should occur, either within or without the
control of any party hereto, which would prevent fulfillment of the conditions
precedent to the obligations of any party to consummate the transactions
contemplated by any of the Transaction Documents, all parties shall use their
respective best efforts to cure or remove the effect of the event as
expeditiously as possible; provided, however, that (without limitation) nothing
set forth in this Section 7.1 shall be construed as requiring any party to
institute litigation or expend any sums in the defense or settlement of
litigation in order to cure or remove the effect of any such event.
7.2 Governmental Consents. Promptly following the full execution of this
Agreement, each of Hercules, Mallinckrodt, Roche and GRI shall take, prepare,
make and/or file, or cause to be taken, prepared, made and/or filed, with each
appropriate Governmental Authority, all actions, filings and requests for
approvals, consents, permits, authorizations or waivers that are required from
such Governmental Authority for the consummation of the transactions
contemplated by each of the Transaction Documents, the D&F Transaction
Agreements and, if requested by the Interested Persons, the Fries Withdrawal and
the Fries Withdrawal Documents and shall diligently and expeditiously prosecute,
and shall cooperate fully with each other in the prosecution of, such actions,
filings and requests and all proceedings necessary to secure such approvals,
consents, permits, authorizations and waivers. The parties acknowledge and agree
that the actions, filings and requests required to be made pursuant to this
Section include, without limitation, compliance with the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976, as amended, and those set forth on APPENDIX F
and, if requested by the Interested Persons, those set forth on APPENDIX G.
Notwithstanding anything in this Section 7.2 to the contrary, none of
Mallinckrodt, Hercules, Roche or GRI, nor any of their respective Affiliates,
shall be required to agree to any consent decree, order or settlement in
connection with an investigation by, filing with or approval, consent permit,
authorization or
59
waiver of any Governmental Authority.
7.3 Public Announcements. None of Hercules, Mallinckrodt, Roche or GRI
shall make any public announcement at any time concerning the Transaction
Documents, the D&F Transaction Agreements or the Fries Withdrawal Documents, or
the transactions contemplated by the Transaction Documents, the D&F Transaction
Agreements, or the Fries Withdrawal Documents, without the prior approval of all
parties to this Agreement. In the event any party to this Agreement determines,
after seeking and obtaining the advice of competent counsel, that a public
announcement concerning the Transaction Documents, the D&F Transaction
Agreements or the Fries Withdrawal Documents, or the transactions contemplated
by the Transaction Documents, the D&F Transaction Agreements or the Fries
Withdrawal Documents, is required by law, the party required to make such
announcement shall give all other parties hereto such notice of, and opportunity
to review, the proposed form and substance of the required announcement as is
practicable under the circumstances, but such review shall in no event prevent
the party required to make such announcement from making an announcement in such
form and substance as it shall reasonably determine is required.
7.4 Further Assurances. After the Closing Date, each of Hercules,
Mallinckrodt, Roche and GRI shall, from time to time upon any other party's
request, execute, acknowledge and deliver, or cause to be executed, acknowledged
and delivered, all such further assignments, documents, data, employment
records, instruments, transfers, conveyances, discharges, releases, assurances
and consents, and shall take or cause to be taken such further actions, as such
other party may reasonably request to further evidence or carry out the
transactions contemplated by, and the purposes of, the Transaction Documents,
the Fries Withdrawal and the Fries Withdrawal Documents.
7.5 Tax Annex. After the Closing Date, each of Hercules, Mallinckrodt,
Roche and GRI shall comply with the terms and conditions of the Tax Annex.
7.6 Tastemaker B.V. Pension. The parties agree to cooperate with each
other in connection with the segregation and transfer of assets allocable to
employees of Tastemaker B.V. from Stichting Pensioenfonds Hercules Nederland
("SPHN") to a successor plan established by Tastemaker B.V.
7.7 Tastemaker Debt. In the event that the Interested Persons give written
notice to the Owners on or before February 7, 1997 of their intent to cause F&F
to exercise of the Fries Withdrawal, from the date of such notice until March 1,
1997, each of Hercules, Mallinckrodt, Roche and GRI shall use their reasonable
best efforts to enable the benefits and obligations of Tastemaker, as borrower,
under the Tastemaker Debt to be assigned to and assumed by, or otherwise
transferred to F&F upon such terms and conditions as are satisfactory to all
parties hereto and consistent with the requirements of the Contribution
60
Agreement and the Partnership Agreement with respect thereto. To such end and to
the extent required, Roche shall unconditionally guaranty the obligations of F&F
with respect to the Tastemaker Debt upon its transfer to F&F and, if required by
the lender of the Tastemaker Debt, Roche shall procure an unconditional guaranty
of such obligations from its ultimate parent, Roche Holdings Ltd. If,
notwithstanding the reasonable best efforts of the parties, the proposed terms
for the assignment, assumption, and transfer of the Tastemaker Debt to F&F are
not agreed with the lenders of the Tastemaker Debt or are not reasonably
satisfactory to the parties hereto by March 1, 1997, each of Hercules,
Mallinckrodt, Roche and GRI shall use their reasonable best efforts to obtain
replacement financing of the Tastemaker Debt upon terms mutually satisfactory to
the parties, which shall permit the assignment, assumption and transfer thereof
to F&F and which will satisfy the terms and conditions set forth in Section
10.2.6 of the Contribution Agreement and Section 8.7.C of the Partnership
Agreement, and the Closing Date shall be changed to a date not later than the
Closing Deadline and mutually agreeable to the parties, which date shall allow a
reasonable time (assuming full cooperation by all parties) to obtain said
replacement financing. The Owners shall pay all costs and fees under the lenders
of the Tastemaker Debt (or any replacement thereof) associated with the transfer
of such obligations to F&F and, if an unconditional guaranty of Roche Holdings
Ltd. is required by the lenders of the Tastemaker Debt and provided by Roche
Holding Ltd., the Owners shall reimburse Roche Holding Ltd. for up to $750,000
of any stamp taxes imposed by a Governmental Authority with respect to such
unconditional guaranty of Roche Holdings Ltd., if and to the extent such stamp
tax is required to be paid by Roche Holdings Ltd. The parties agree that they
will not unreasonably withhold any consent or agreement required of the parties
in this Section 7.7.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS:
INDEMNITY FOR DAMAGES
8.1 Survival. All representations and warranties of the parties made in
this Agreement, and all covenants and agreements of the parties made in this
Agreement and required to be performed on or before the Closing Date, shall
survive until 5:00 p.m. Eastern Standard Time on the second annual anniversary
of the Closing Date, notwithstanding any investigation heretofore made or
omitted by the parties, and shall expire and be of no further force and effect
after such time; provided that (i) the representations and warranties contained
in Sections 3.1, 3.2, 4.1 and 4.2 shall survive indefinitely, (ii) the
representations and warranties in Section 3.12 shall survive until the fifth
anniversary of the Closing Date, (iii) the covenants, agreements,
representations and warranties in the Tax Annex and Sections 3.13 and 3.17 shall
survive until expiration of the statute of limitations applicable to the matters
covered thereby, if any (giving effect to any waiver, mitigation or extension
thereof) or, if none is applicable, the second annual anniversary of the
61
Closing Date, and (iv) the representations and warranties in Sections 3.22 and
4.5 shall survive for two days after the Closing Date unless the Fries
Withdrawal Closing occurs within two days after the Closing Date in which case
such representations and warranties shall survive until the second annual
anniversary of the Closing Date. No party will have any liability to any other
party arising out of a breach of any representation or warranty contained in
this Agreement or of any covenant or agreement made in this Agreement and
required to be performed on or before the Closing Date, unless the party
claiming that such breach occurred gives to all other parties hereto written
notice and a detailed explanation of the alleged breach on or before 5:00 p.m.
Eastern Standard Time on the last day of the applicable survival period;
provided, however, that if notice of a claim is timely given, the claim
specified in such notice, and the specific representation, warranty, covenant or
agreement upon which any such claim is based, shall survive until such claim has
been finally resolved and provided further that for the purpose of this Section,
notice of a claim shall be deemed given by the Interested Persons on the Closing
Date with respect to those items disclosed under the heading "SPECIFIED
ENVIRONMENTAL MATTERS" on SCHEDULE 3.12 of the Disclosure Schedule.
8.2 Indemnity by the Interested Persons. Subject to the provisions of
Section 8.1 above, and further subject to any rights of set off of Roche and GRI
or any Affiliate of Roche and GRI against either of the Owners or their
respective Affiliates, each of Roche and GRI shall indemnify and hold harmless
each of Hercules and Mallinckrodt, and each of their respective officers,
directors, agents, employees, subsidiaries, affiliates and representatives in
respect of any Damages suffered or incurred as a result of or arising out of the
breach by Roche, GRI or Newco of any representation, warranty, covenant or
agreement set forth in any of the Transaction Documents. From and after the
Fries Withdrawal Closing (if it occurs), each of Roche and GRI shall indemnify
and hold harmless each of Hercules and Mallinckrodt, and each of their
respective officers, directors, agents, employees, subsidiaries, affiliates and
representatives, in respect of any Damages suffered or incurred as a result of
or arising out of the breach by F&F after the Closing of any representation,
warranty, covenant or agreement set forth in the Partnership Agreement or any of
the Fries Withdrawal Documents.
8.3 Indemnity by the Owners. Subject to the provisions of Section 8.1
above, and further subject to any rights of set off of Hercules or Mallinckrodt
or any Affiliate of Hercules or Mallinckrodt against either of the Interested
Persons or their respective Affiliates, each of the Owners shall indemnify and
hold harmless the Interested Persons, their officers, directors, agents,
employees, subsidiaries, affiliates and representatives in respect of any
Damages suffered or incurred as a result of or arising out of the breach by the
Owners of any representation, warranty, covenant or agreement set forth in this
Agreement; provided, however, that for purposes of determining whether a
62
breach by the Owners of a representation set forth in Article 3 (other than the
representation and warranty in the first clause (iv) of Section 3.9, as to which
this proviso shall not be applicable) is indemnifiable pursuant to this Section
8.3, the accuracy of such representations shall be determined without giving
effect to the qualifications to such representations concerning "material"
(including as such term qualifies specific items or effects) and "OWNERS'
KNOWLEDGE," and, with respect to Section 3.12 only, without giving effect to the
disclosures set forth under the heading "SPECIFIED ENVIRONMENTAL MATTERS" in
SCHEDULE 3.12 of the Disclosure Schedule and without giving effect to the
disclosures set forth in item three under the heading "OTHER CLAIMS" on SCHEDULE
3.14, provided further, any claim for indemnification for breach of a
representation and warranty contained in Section 3.1 through 3.11 and 3.14
through 3.22 shall not be indemnifiable, pursuant to Section 8.3, or counted
toward the Indemnification Threshold, unless the actual and determined Damages
suffered or incurred as a result of or arising out of such breach exceed
$500,000, and any claim for indemnification for a breach of the representation
and warranty contained in Section 3.12 shall not be indemnifiable, pursuant to
Section 8.3, or counted toward the Environmental Indemnification Threshold,
unless the actual and determined Damages suffered or incurred as a result of or
arising out of such breach exceed $100,000, it being agreed in both cases that
(i) all claims arising out of a set of operative facts or arising out of or in
connection with an event or series of events joined by a common nexus of
operative facts may be aggregated for such purposes, and (ii) the Owners shall
have no liability to the Interested Persons, their officers, directors, agents,
employees, subsidiaries, affiliates and representatives for any claim for breach
of a representation and warranty arising out of a set of operative facts or
arising out of or in connection with an event or series of events joined by a
common nexus of operative facts if the actual and determined Damages suffered or
incurred as a result of or arising out of such breach are less than or equal to
$500,000 for an Article 3 (other than Sections 3.12 and 3.13) breach and
$100,000 for a Section 3.12 breach.
8.4 Indemnity by Hercules. Subject to the provisions of Section 8.1 above,
and further subject to any rights of set off of Hercules or any Affiliate of
Hercules against either of the Interested Persons or their respective
Affiliates, Hercules shall indemnify and hold harmless Roche and/or GRI, as
applicable, their officers, directors, agents, employees, subsidiaries,
affiliates and representatives in respect of any Damages suffered or incurred as
a result of or arising out of the breach by Hercules or HNBV of any
representation, warranty, covenant or agreement set forth in the Hercules
Transaction Agreement.
8.5 Indemnity by Mallinckrodt. Subject to the provisions of Section
8.1, and further subject to any rights of set off of Mallinckrodt or any
Affiliate of Mallinckrodt against either of the Interested Persons or any of
their respective Affiliates, Mallinckrodt shall indemnify and hold harmless
Roche and/or GRI,
63
as applicable, their officers, directors, agents, employees, subsidiaries,
affiliates and representatives in respect of any Damages suffered or incurred as
a result of or arising out of the breach by Mallinckrodt of any representation,
warranty, covenant or agreement set forth in the Contribution Agreement.
8.6 Limitations on the Owners' Indemnification Obligations.
(a) Notwithstanding anything in this Article 8 to the contrary, neither
Hercules nor Mallinckrodt shall have any liability or obligation to indemnify
the Interested Persons pursuant to Section 8.3 hereof (except as otherwise
provided in Sections 8.6(b) and 8.10 and in the Tax Annex) with respect to a
breach of a representation or warranty, unless and until the aggregate liability
of the Owners for all indemnifiable Damages of the Interested Persons, their
officers, directors, agents, employees, subsidiaries, affiliates and
representatives, other than those indemnifiable Damages pursuant to Sections
8.6(b) and 8.10 hereof and the Tax Annex hereto, exceeds the Indemnification
Threshold, and then the Owners shall only be liable for indemnifiable Damages of
the Interested Persons (other than those indemnifiable Damages pursuant to
Sections 8.6(b) and 8.10 hereof and the Tax Annex hereto, which shall be paid as
provided therein), their officers, directors, agents, employees, subsidiaries,
affiliates and representatives in excess of the Indemnification Threshold.
(b) Notwithstanding anything in this Article 8 to the contrary, neither
Hercules nor Mallinckrodt shall have any liability or obligation to indemnify
the Interested Persons pursuant to Section 8.3 hereof with respect to a breach
by the Owners of any representation or warranty set forth in Section 3.12 (an
"ENVIRONMENTAL BREACH") unless and until the aggregate liability of the Owners
for all indemnifiable Damages of the Interested Persons, their officers,
directors, agents, employees, subsidiaries, affiliates and representatives
arising as a result of or out of such Environmental Breaches exceeds five
million dollars ($5,000,000) (the "ENVIRONMENTAL INDEMNIFICATION THRESHOLD"),
and then the Owners shall be liable for indemnifiable Damages (without regard to
the Indemnification Threshold provision of Section 8.6(a) hereof) of the
Interested Persons, their officers, directors, agents, employees, subsidiaries,
affiliates and representatives arising as a result of or out of any
Environmental Breach to the extent in excess of the Environmental
Indemnification Threshold; provided, however, that indemnifiable Damages arising
as a result of or out of any Environmental Breach, to the extent they are for
investigatory, clean up or remedial activities, shall be limited, except as set
forth below, to those costs and expenses that are required by a Governmental
Authority possessing jurisdiction over the matter, based upon the most
cost-effective alternative allowable by such Governmental Authority and
utilizing the most cost-effective technology available,e and provided, further,
if the Interested Persons undertake any investigatory, clean up, remedial or
excavation activities at the facility other than as required (i) under the
Participation Agreement with BSB Gelderland dated February 10, 1994 or (ii) by
a Governmental Authority possessing jurisdiction over the matter and based upon
the most cost-
64
effective alternative allowable by such Governmental Authority and utilizing the
effective technology available, with respect to the soil and ground water
contamination at Barneveld, The Netherlands, which is disclosed under the
heading "SPECIFIED ENVIRONMENTAL MATTERS" on SCHEDULE 3.12 of the Disclosure
Schedule, all Damages with respect to such soil and ground water contamination
shall be limited to an aggregate amount of two million five hundred thousand
dollars ($2,500,000); and provided further, that for purposes of determining
whether an Environmental Breach has occurred, the accuracy of the
representations set forth in Section 3.12 shall be determined without giving
effect to the disclosures set forth under the heading "SPECIFIED ENVIRONMENTAL
MATTERS" in SCHEDULE 3.12 of the Disclosure Schedule.
(c) Further, and notwithstanding anything in this Article 8 to the
contrary, the aggregate liability of the Owners to the Interested Persons under
Section 8.3 with respect to a breach of a representation or warranty shall in no
event exceed the Owners' Maximum Liability; provided that (i) the liability of
the Owners under the Tax Annex hereto shall not be subject to Owners' Maximum
Liability, but shall in no event exceed the limitations set forth in the Tax
Annex; and (ii) the liability of the Owners under the Tax Annex hereto shall not
count towards the determination of whether the Owners' liability pursuant to
Section 8.3 has exceeded the Owners' Maximum Liability. In addition to the
limitations on the liability of the Owners set forth in this Article 8, each of
Hercules, Mallinckrodt, Roche and GRI agrees that (x) the liability of Hercules
and Mallinckrodt under Section 8.3 of this Agreement and the Tax Annex hereto
shall not be affected by whether the applicable breach is caused by or
attributable to one or the other (or neither) of them, and (y) the Interested
Persons and their respective officers, directors, agents, employees,
subsidiaries, affiliates and representatives shall not seek to recover from
either of Hercules or Mallinckrodt, and neither Hercules nor Mallinckrodt shall
in any event be liable for, more than fifty percent (50%) of the Damages
recoverable by the Interested Persons and their officers, directors, agents,
employees, subsidiaries, affiliates and representatives from the Owners pursuant
to Section 8.3 above; it being the intention of the parties that Hercules and
Mallinckrodt equally bear the burden of the indemnification obligations set
forth in Section 8.3 and that neither Owner shall be liable or responsible for
any failure, inability or unavailability of the other Owner with respect to the
obligations of the Owners in Section 8.3 above. Notwithstanding anything herein
to the contrary (i) Hercules shall in no event have any liability or
responsibility for any representation, warranty, covenant or agreement set forth
in either of the Contribution Agreement or the F&F Transaction Agreement; (ii)
Mallinckrodt shall in no event have any liability or responsibility for any
representation, warranty, covenant or agreement set forth in either of the
Hercules Transaction Agreement or, except as expressly provided in Section 5.5
of the Contribution Agreement, the F&F Transaction Agreement; (iii) none of the
Indemnification Threshold, the Owners' Maximum Liability
65
or the $500,000 and $100,000 limitations set forth in Section 8.3 shall be
applicable to limit the liability of Hercules or Mallinckrodt to any of the
Interested Persons under Sections 8.4 and 8.5, respectively, above; and (iv) in
no event shall Damages recoverable pursuant to this Article 8 or pursuant to the
Tax Annex be duplicative.
(d) Notwithstanding anything contained herein to the contrary, the parties
hereto intend and agree that the limitations on Damages recoverable from the
Owners set forth in this Section 8.6 or Section 8.3 above shall not be
applicable to the breach of a covenant or agreement (as opposed to a
representation or warranty) by the Owners; provided, however, that for purposes
of such limitations on Damages, any covenant or agreement relating to the truth
or veracity of the representations and warranties of the Owners shall be treated
in the same manner as a representation or warranty and the breach of any such
covenant or agreement shall be subject to the limitations set forth in this
Section 8.6 and in the last proviso of Section 8.3 above.
8.7 Limitations of Remedies. The indemnification remedy set forth in this
Section 8 and the Tax Annex and any injunctive or other equitable relief to
which any party may be entitled from a court of appropriate jurisdiction shall
be the sole remedies to which any party hereto is entitled for any breach or
non-compliance with the provisions of the Transaction Documents, or any
agreement, instrument or document delivered in connection therewith. Any
recovery of Damages pursuant to the indemnification remedy set forth in this
Section 8 (other than with respect to an Environmental Breach pursuant to
Section 8.10 hereof or the Tax Annex), shall be limited to a recovery of
compensatory damages and shall not include any punitive or consequential damages
or other non-compensatory damages; provided that any such punitive or
consequential damages or other non-compensatory damages shall be recoverable if
such damages are suffered or incurred as a result of or arising out of an
Environmental Breach or to the extent awarded by a court or other adjudicative
body of appropriate jurisdiction and authority at an outcome of any third party
claim for which indemnification is otherwise available hereunder.
8.8 Indemnification Procedures. The parties agree that the procedures for
asserting claims for indemnification and recovery of Damages pursuant to this
Section 8 shall be as follows:
8.8.1 Notice of Claims. In the event that a party (the "INDEMNIFIED
PARTY") shall reasonably believe that it has a claim for Damages (whether or not
arising out of a third party claim) against any other party or parties hereto
pursuant to this Section 8 ("INDEMNIFICATION CLAIM"), it shall give prompt
notice in accordance herewith to the responsible party or parties (the
"INDEMNIFYING PARTY") of the nature and extent of such Indemnification Claim and
the Damages incurred by it; provided that any failure to give such notice shall
not affect the Indemnified Party's right to indemnification hereunder except to
the extent the Indemnifying Party is prejudiced thereby. If the
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Damages are liquidated in amount, the notice shall so state, and such amount
shall be deemed the amount of such Indemnification Claim of the Indemnified
Party against the Indemnifying Party (subject to the right of the Indemnified
Party to submit claims for additional indemnifiable Damages incurred after the
date of any such notice). If the amount is not liquidated, the notice shall so
state and, in such event, such Indemnification Claim shall be deemed asserted
against the Indemnifying Party, but no payment or satisfaction shall be made on
account thereof until the amount of such Indemnification Claim is liquidated.
Such notice shall also describe the consequences of a failure to respond to such
notice within the time periods set forth in, and pursuant to, Section 8.8.2
below.
8.8.2 Failure to Respond to Notice. If the Indemnifying Party shall
not, within twenty (20) days after the giving of such notice by the Indemnified
Party, notify the Indemnified Party in accordance herewith that the Indemnifying
Party disputes the right of the Indemnified Party to indemnity in respect of
such Indemnification Claim, then such Indemnification Claim shall be paid or
satisfied as follows: (i) if said Indemnification Claim is liquidated then,
subject to the limitations set forth in Sections 8.3 and 8.6 above, the full
amount of Damages associated with such Indemnification Claim shall be paid to
the Indemnified Party by the Indemnifying Party at the end of such twenty (20)
day period, or (ii) if the amount of such Indemnification Claim is unliquidated
at the time notice is originally given to the Indemnifying Party, the
Indemnified Party shall give a second notice to the Indemnifying Party when the
liquidated amount of such Indemnification Claim is known and, unless the
Indemnifying Party shall object in writing to such amount (as opposed to the
Indemnification Claim itself, as to which the right to dispute has expired)
within twenty (20) days after the giving of said second notice, then, subject to
the limitations set forth in Sections 8.3 and 8.6, the payment of such
Indemnification Claim shall be made by the Indemnifying Party to the Indemnified
Party at the end of such twenty (20) day period. Any portion of the amount of
Damages asserted by an Indemnified Party in connection with an Indemnification
Claim shall, if not objected to by the Indemnifying Party in accordance with the
procedures established herein, be considered to be subject to satisfaction by
payment without further objection. If, on its own initiative and in accordance
with the provisions of this Section and any other provisions herein as
applicable, the Indemnifying Party shall not have made payments to the
Indemnified Party of any Indemnification Claim when said payment is due, the
Indemnified Party shall have the right to enforce in any court of appropriate
jurisdiction its right, subject to Section 9.6 hereof, to collect from the
Indemnifying Party the amount of such Indemnification Claim.
8.8.3 Notice of Dispute. If an Indemnifying Party shall notify the
Indemnified Party that it disputes any Indemnification Claim or the amount of
Damages in respect thereof (which notice shall only be given if the Indemnifying
Party has a good faith belief that the Indemnified Party is not entitled to
indemnity or the full amount of indemnity as claimed) then the
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parties hereto shall endeavor to settle and compromise such Indemnification
Claim, and if unable to agree on any settlement or compromise, such
Indemnification Claim shall be settled in accordance with the dispute resolution
provisions of Section 9, and any liability and the amount of the Damages
established pursuant to Section 9 shall be promptly paid and satisfied.
8.8.4 Third Party Claims. An Indemnified Party will promptly give
notice to the Indemnifying Party of any claim of a third party which may
reasonably be expected to result in an Indemnification Claim by the Indemnified
Party. Subject to Section 8.8.6, an Indemnifying Party shall have the right to
direct the defense, compromise or settlement of such third party claim with
counsel selected by it, provided the Indemnifying Party gives written notice to
the Indemnified Party of its election to do so within twenty (20) days after
receipt of notice in accordance with the preceding sentence, subject to the
right of the Indemnifying Party to tender the defense, compromise or settlement
of any such claim back to the Indemnified Party if, on the basis of subsequently
discovered information it becomes clear that such claim is not subject to
indemnification hereunder. If the Indemnifying Party fails to so notify the
Indemnified Party of its election to defend any such third party claim, the
Indemnified Party will (upon further notice to the Indemnifying Party) have the
right to undertake the defense, compromise or settlement of such third party
claim, subject to the right of the Indemnifying Party to assume the defense of
any such claim at any time prior to settlement, compromise or final
determination thereof, if and only if such assumption would not materially
prejudice the defense of such third party claim or the rights of the Indemnified
Party. It is understood that any party undertaking the defense, compromise, or
settlement of an indemnifiable claim hereunder shall pursue diligently such
claim in good faith with a view toward achieving the most favorable possible
resolution of such claim.
8.8.4.1 Participation by Indemnified Party. In the event an
Indemnifying Party has assumed the defense of any such third party claim, the
Indemnified Party shall nonetheless have the right to select its own counsel and
participate in the defense of such third party claim at and for its own expense
and account. Counsel for the Indemnified Party in such circumstances shall
consult and cooperate at all times with counsel for the Indemnifying Party in
defending against any such third party claim.
8.8.4.2 Full Release. An Indemnifying Party shall not under any
circumstances, without the prior written consent of the Indemnified Party,
settle or compromise any third party claim or consent to the entry of any
judgment which (i) provides for any form of relief against the Indemnified Party
other than monetary relief that will be paid in full by the Indemnifying Party,
or (ii) does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party a release from all liability
in respect of such third party claim, in form and substance reasonably
satisfactory to the Indemnified Party.
8.8.4.3 Refusal to Settle. Notwithstanding
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anything to the contrary contained herein, if a third party claim is made which
the third party has unequivocally offered in writing to settle on a basis that
satisfies the requirements of Section 8.8.4.2 above (an "UNEQUIVOCAL OFFER") but
an Indemnified Party elects not to settle on the basis of such Unequivocal
Offer, then either (a) if the defense, compromise or settlement of such claim
has been previously assumed by the Indemnifying Party, at the option of the
Indemnifying Party the Indemnifying Party may pay to the Indemnified Party an
amount equal to the amount required to be paid in such Unequivocal Offer (plus
any related reasonable costs and expenses theretofore incurred by the
Indemnified Party with respect to such claim) and, upon such payment, the
Indemnifying Party shall be released from and held harmless by the Indemnified
Party with respect to all Damages suffered or incurred as a result of arising
out of said third party claim and the Indemnified Party shall assume the
defense, compromise or settlement of such claim, or (b) if the defense,
compromise or settlement of such claim has not been assumed by the Indemnifying
Party, the Indemnifying Party shall not be liable hereunder, with respect to any
Indemnification Claim arising from such third party claim, for more than the
amount set forth in any such Unequivocal Offer (or, if more than one Unequivocal
Offer has been made with respect to such third-party claim, the Unequivocal
Offer that required the lowest payment) plus any related reasonable costs and
expenses incurred by the Indemnified Party as of the date of such Unequivocal
Offer unless either (i) the Unequivocal Offer was delivered to and rejected by
the Indemnifying Party, or (ii) the Unequivocal Offer was delivered to the
Indemnifying Party and the Indemnifying Party did not, within ten (10) days
after receipt of such Unequivocal Offer, notify the Indemnified Party in writing
that such Indemnifying Party would pay the amount requested in the Unequivocal
Offer.
8.8.5 Claims Made in Written Notice. All claims for indemnification
hereunder shall be made in a written notice setting forth, with particularity,
the nature of the claim for which indemnification is sought. All parties agree
that no claim for indemnification shall be made hereunder unless the party
requesting indemnification shall have a good faith belief that it is entitled to
indemnification hereunder.
8.8.6 Control in Cases of Environmental Breach. With respect to any
claim for indemnification made pursuant to Section 8.3 as a result of a breach
of Section 3.12 which does or would reasonably be expected to involve any
investigative, clean up or other remedial activities on property then owned or
leased by the Interested Persons or their Affiliates ("REMEDIAL WORK"), the
Indemnified Party shall have the option to direct the defense, compromise or
settlement of such claim until the Environmental Indemnification Threshold has
been met, and thereafter the Indemnifying Party shall have the option to direct
the defense, compromise or settlement of any such claim (such party, as
applicable, shall be the "CONTROLLING PARTY"). Both parties agree to cooperate
in good faith in resolving any such claim. In addition, the Controlling Party
agrees to (a) use consultants and contractors which are reasonably satisfactory
to
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the other party, (b) ensure that any Remedial Work is conducted in a safe,
lawful and workmanlike manner in compliance with all Environmental Requirements,
(c) provide the other party with reasonable advance notice of and an opportunity
to comment upon any filings to be made with any Governmental Authority or other
third parties and (d) provide the other party with reasonable advance notice of
and an opportunity to review and comment upon plans for and written reports of,
and to observe any, Remedial Work. To the extent the Indemnifying Party is the
Controlling Party, the Controlling Party agrees that it will use reasonable
efforts to avoid interference with the normal business operations of the
Companies and the Interested Persons agree to provide necessary access during
normal business hours to the property of the Companies. Where the Indemnifying
Party is the Controlling Party and has received a bid for necessary Remedial
Work from a qualified consultant or contractor, the Interested Persons shall
have the option to direct or undertake the Remedial Work themselves in which
case the indemnifiable Damages shall be limited to the amount of the bid,
notwithstanding anything in Sections 8.3 and 8.6 to the contrary.
8.9 Tax Annex is Controlling. Notwithstanding any provision in this
Agreement to the contrary, to the extent that any provision in this Article 8 is
inconsistent with the Tax Annex, the Tax Annex shall be controlling.
8.10 Registration Indemnity. Each of the Owners shall indemnify and hold
harmless the Interested Persons in connection with all costs and expenses,
including, without limitation, application, registration and filing fees, in
excess of $3,000,000 incurred by the Interested Persons in connection with the
registration with or GRAS ("GENERALLY RECOGNIZED AS SAFE") clearance or approval
by the United States Food and Drug Administration (FDA), the Flavor Expert Panel
(FEXPAN) or any other similar non-governmental authority or Governmental
Authority of any chemical substance, component or ingredient ("SUBSTANCE") used
as of the date hereof, or as of the Closing Date in the manufacturing or
production of products by any of the Companies to the extent not registered with
or GRAS-cleared by any such non-governmental authority or Governmental Authority
as of the date hereof, or as of the Closing Date; provided that the indemnity
provided in this Section 8.10 shall only apply to one registration, clearance or
approval per Substance (in each case as specified by the Owners) and shall
expire on the sixth annual anniversary of the Closing Date, after which date
Owners shall have no further liability or obligations under this Section 8.10,
and provided, further, that after the Closing the Interested Persons use their
best efforts to achieve all such registrations in a cost-effective manner and at
the earliest practical date, and provided further that the Owners shall in no
event be liable for the costs of registering the substances, components or
ingredients described on SCHEDULE 8.10 of the Disclosure Schedule, nor shall
such costs be considered in determining whether the $3,000,000 referenced above
has been exceeded. Notwithstanding any other provision hereof, it is understood
by
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the parties that no threshold, deductible or limitation on indemnification
hereunder (including, without limitation, the Owners' Maximum Liability
limitation or the $500,000 and $100,000 limitations on the size of indemnifiable
claims set forth in Section 8.3 above) shall relate to the provisions of this
Section 8.10, and indemnification under this Section 8.10 shall not be counted
toward the Indemnification Threshold or the Environmental Indemnification
Threshold.
8.11 Mitigation of Damages. Notwithstanding anything to the contrary
contained herein, the Indemnified Party shall be obliged to mitigate the amount
of Damages otherwise recoverable hereunder, except that such duty of mitigation
shall not apply with respect to any Damages recoverable as a consequence of any
breach of Section 3.12 hereof.
8.12 Reliance Upon Agreement. In the event the Fries Withdrawal is
exercised and the Fries Withdrawal Closing occurs within two days after the
Closing Date (i) each of Roche, GRI, Hercules and Mallinckrodt acknowledges and
agrees that in exercising the Fries Withdrawal and consummating the Fries
Withdrawal Closing, and after the consummation of the Fries Withdrawal
Documents, each of Roche, GRI, Hercules and Mallinckrodt, on behalf of
themselves and their respective Affiliates, is relying upon, and is entitled to
rely upon, the representations, warranties and covenants of Roche, GRI, Hercules
and Mallinckrodt set forth in this Agreement, and (ii) each of Hercules and
Roche agrees, on behalf of themselves and their respective Affiliates that are
partners of Tastemaker, that the "ESTIMATED ADJUSTED AGGREGATE VALUE," the
"ADJUSTED AGGREGATE VALUE," the "ESTIMATED TASTEMAKER B.V. VALUE," and the
"TASTEMAKER B.V. VALUE" (as such quoted terms are used and defined in the
Partnership Agreement) shall equal, and shall be determined in the same manner
as, the Estimated Adjusted Aggregate Value, the Adjusted Aggregate Value, the
Estimated Tastemaker B.V. Value and the Tastemaker B.V. Value, respectively,
determined in accordance with Section 2.6 of this Agreement.
9. RESOLUTION OF DISPUTES
9.1 Conclusive and Exclusive. Except as expressly provided (i) in the Tax
Annex and (ii) in Section 2.6.1 with respect to the procedures for resolving
disputes regarding the Working Capital Adjustment and the Long-Term Liabilities
Adjustment, each and all disputes under the Transaction Documents shall be
conclusively and exclusively resolved in accordance with the terms and
conditions set forth in this Section 9. Notwithstanding the foregoing, the
parties recognize and acknowledge that (i) in the event that all conditions
precedent to the transactions contemplated by the Transaction Documents, the D&F
Transaction Agreements and, if applicable, the Fries Withdrawal Documents have
been satisfied or waived and the consummation of any of the transactions
contemplated by such agreements and documents (other than the initial
transactions
71
contemplated by the Designated Transaction Agreements) does not follow as soon
as practicable after such initial transaction, then specific performance of any
such transactions shall be a remedy that the Interested Persons may seek and the
parties agree that the Interested Persons shall be entitled to such remedy; and
(ii) in the event of a potential, anticipatory or actual breach of certain
provisions of the Transaction Documents and the D&F Transaction Agreements
(dealing with confidentiality, public announcements, non-competition and the
like) it may be necessary or appropriate for a non-breaching party to seek
injunctive relief, if and to the extent legally available, in order to avoid
harm or further harm to such non-breaching party, and the parties hereby agree
that any such non-breaching party shall be entitled to seek and obtain
injunctive relief (but only injunctive relief) in any court of competent
jurisdiction (subject to Section 9.6 below) without first complying with this
Article 9; provided, however, that (i) if granted, such injunctive relief shall
apply only to prevent a breach or further breach of the specific Sections of the
Transaction Documents and the D&F Transaction Agreements for which such relief
is appropriate and shall remain in effect only so long as the court deems
necessary or appropriate to permit resolution of the underlying disputes in
accordance with this Article 9, and (ii) no other relief or claim may be
obtained or sought from the court granting any such injunctive relief unless and
until the parties have fully complied with the dispute resolution provisions of
Sections 9.2 through 9.5 of this Article 9. Neither the seeking of injunctive
relief nor the granting thereof is intended to, or shall, result in the
application of a substantive or procedural law other than the applicable
governing law pursuant to Section 11.9 hereof.
9.2 Resolution Panel. Subject to Section 9.1, any dispute under the
Transaction Documents shall first be submitted to a panel made up of officers
from the parties to the dispute (the "RESOLUTION PANEL"). If the dispute
involves both of the Interested Persons and both of the Owners, the Resolution
Panel shall consist of four members, of which two members shall be the Chief
Executive Officers, or other duly authorized executive managers not theretofore
involved in the dispute, of Roche and GRI or their Affiliates, and the other two
members shall be the Chief Executive Officers or Chief Operating Officers, or
another duly authorized executive manager not theretofore involved in the
dispute, of Hercules and Mallinckrodt and their Affiliates. If the dispute
involves only one of the Interested Persons and/or only one of the Owners, the
Resolution Panel shall consist of four members, which shall include the Chief
Executive Officers or Chief Operating Officers or other duly authorized
executive managers not theretofore involved in the dispute of all parties to the
dispute and (i) if only one Interested Person is involved in the dispute,
another authorized executive manager of such Interested Person, and (ii) if only
one Owner is involved in the dispute, another authorized executive manager of
such Owner; provided, however, that the parties not involved in the dispute
shall be given notice of, and access to information relevant to, the dispute.
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9.3 Position Statements. Subject to Section 9.1 in the event of a dispute
under the Transaction Documents (except as otherwise provided in any Transaction
Document), any party may give a notice to the other parties (including any party
not involved in the dispute) requesting that the Resolution Panel try in good
faith to negotiate a resolution of (but without any obligation to resolve) such
dispute. Not later than fifteen (15) days after said notice, each party involved
in the dispute shall submit to all other parties (including any party not
involved in the dispute) a written statement (provided that if both of the
Owners are involved in such dispute, the Owners shall be entitled, but not
obligated, to submit a joint written statement, and if both of the Interested
Persons are involved in such dispute, the Interested Persons shall be entitled,
but not obligated, to submit a joint written statement) setting forth such
party's description of the dispute and of the respective positions of the
parties on such dispute, and such party's recommended resolution and the reasons
why such party feels its recommended resolution is fair and equitable in light
of the terms and spirit of the Transaction Documents. The submission and
exchange of such written statements of the parties shall be simultaneous. Such
statements represent part of a good-faith effort to resolve a dispute and as
such, no statement may be introduced as evidence or used as an admission against
interest in any judicial resolution of such dispute.
9.4 Negotiations. If the dispute continues unresolved for a period of
fifteen (15) days (or such longer period as the Resolution Panel may otherwise
agree upon) after the simultaneous exchange of such written statements, then the
Resolution Panel shall promptly commence and thereafter pursue for a period of
not less than thirty (30) days good-faith negotiations to resolve such dispute
(the "RESOLUTION NEGOTIATIONS") but without any obligation to resolve it. A
party not involved in the dispute shall be entitled to observe, but not
participate in, the Resolution Negotiations.
9.5 Resolution Panel Decision. If, within thirty (30) days (or such longer
period as the Resolution Panel may unanimously agree) after the commencement of
Resolution Negotiations, (i) the Resolution Panel renders an agreed resolution
on the matter in dispute, then all parties shall be bound thereby and judgment
upon such resolution may be entered in any court having requisite jurisdiction;
or (ii) the Resolution Panel does not render an agreed resolution, then the
parties involved in such dispute shall be free to pursue their legal rights and
remedies in such manner as they may determine, subject, however, to the
provisions of Section 9.6 below.
9.6 Forum and Waivers. EACH OF ROCHE, GRI, MALLINCKRODT AND HERCULES
AGREES THAT, EXCEPT TO THE EXTENT OTHERWISE PROVIDED IN THE TAX ANNEX, ANY
ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF ANY ONE OR MORE OF
THE TRANSACTION DOCUMENTS, OR THE VALIDITY OR PERFORMANCE OF ANY OF THE
TRANSACTION DOCUMENTS,
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SHALL BE INITIATED AND PROSECUTED AS TO ALL PARTIES TO THE DISPUTE AND THEIR
SUCCESSORS AND ASSIGNS AT NEW YORK, NEW YORK, WHICH SHALL BE THE EXCLUSIVE FORUM
FOR ALL SUCH ACTIONS, SUITS OR PROCEEDINGS. EACH OF ROCHE, GRI, MALLINCKRODT AND
HERCULES CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS PERSON
BY ANY STATE OR FEDERAL COURT SITUATED AT NEW YORK, NEW YORK HAVING JURISDICTION
OVER THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED
TO THE PARTIES AT THEIR RESPECTIVE ADDRESSES SET FORTH IN SECTION 11.3 OR AS
OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF NEW YORK.
EACH OF ROCHE, GRI, MALLINCKRODT AND HERCULES WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT. EACH OF ROCHE, GRI, MALLINCKRODT AND HERCULES
HEREBY RECIPROCALLY AND IRREVOCABLY WAIVES TRIAL BY JURY IN CONNECTION WITH ANY
DISPUTE RELATING TO THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
BY THE TRANSACTION DOCUMENTS.
10. CONDITIONS PRECEDENT
10.1 Conditions to Obligations of the Interested Persons. The obligations
of the Interested Persons to consummate the transactions contemplated by the
Transaction Documents are subject to the satisfaction or waiver by the
Interested Persons in writing of each of the following conditions precedent:
10.1.1 Accuracy of Representations and Warranties. The representations
and warranties of the Owners made in this Agreement shall be true and correct in
all material respects on the Closing Date.
10.1.2 Performance of Agreements. Each of the Owners shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants and conditions contained in this
Agreement to be performed and complied with by it on or prior to the Closing
Date.
10.1.3 Officers' Certificate. Each of the Interested Persons shall
have received from each Owner a certificate dated the Closing Date signed by a
duly authorized officer of each of the Owners delivering such certificate and
certifying to each of the Interested Persons that the representations and
warranties of the Owners made herein are true and correct in all material
respects on the Closing Date as if made at and as of such date and that the
Owner rendering such certificate has performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants and conditions contained in this Agreement to be performed and
complied with by it at or prior to the Closing Date.
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10.1.4 Applicable Law; Governmental Approvals; Filings. No provision
of any applicable law or regulation and no judgment, injunction, order or decree
shall prohibit the consummation of the Closing. The licenses, permits, consents
and approvals of Governmental Authorities required by law and listed in APPENDIX
K hereto shall have been obtained in form and substance reasonably satisfactory
to each of the Interested Persons and shall not have been revoked, and any
applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act
of 1976, as amended, relating to the transactions contemplated hereby shall have
expired or been terminated.
10.1.5 Litigation; Governmental Action. There shall not be pending or
in force on the Closing Date any injunction, order or decree, or any complaint
of any Governmental Authority praying for an order or decree, restraining or
enjoining the consummation of the transactions contemplated by any one or more
of the Transaction Documents, and no Governmental Authority shall have
instituted, or notified the Interested Persons of its intention to institute,
any suit, investigation or proceeding seeking to nullify, render ineffective or
attack on any substantive grounds the legality of any one or more of the
Transaction Documents.
10.1.6 Material Change. Between the date hereof and the Closing Date,
there shall not have occurred any event which individually or in aggregate has
had or would reasonably be expected to have a material adverse effect on the
Companies.
10.1.7 Transaction Agreement Conditions. Each of the Transaction
Documents and the F&F Transaction Agreement shall have been executed by each
party thereto, and all of the conditions precedent to the obligations of the
Interested Persons set forth in the Transaction Documents and the F&F
Transaction Agreement shall have been satisfied or waived by the Interested
Persons in writing.
10.1.8 Works Council Act. The requirements for compliance under the
Dutch Code of Conduct for Mergers and the Dutch Works Council Act shall have
been satisfied and no appeal to the Enterprise Division of the Amsterdam Court
of Appeal shall have been made by the Works Council; provided that all
information provided to the Owners by the Interested Persons in connection with
such requirements was to the knowledge of such Interested Persons' true at the
time made; and provided further that the Interested Persons contacts with the
Works Council in connection with such requirements have been forthright and in
good faith.
10.1.9 Designated Transactions Closing. The closing of the
transactions contemplated by each of the Designated Transaction Agreements shall
have occurred and been completed.
10.1.10 Specified Third Party Consents. The consents
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described, and under the items listed, on APPENDIX J shall have been obtained.
10.1.11 Withdrawal Approvals; Litigation. No provision of any
applicable law or regulation and no judgment, injunction, order or decree shall
prohibit the consummation of the Fries Withdrawal Closing. The licenses,
permits, consents and approvals of Governmental Authorities required by law for
the consummation of the Fries Withdrawal Closing and listed in APPENDIX K hereto
shall have been obtained in form and substance reasonably satisfactory to each
of the Interested Persons and shall not have been revoked, and any applicable
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as
amended, relating to the Fries Withdrawal shall have expired or been terminated.
There shall not be pending or in force on the Fries Withdrawal Closing any
injunction, order or decree, or any complaint of any Governmental Authority
praying for an order or decree, restraining or enjoining the consummation of the
transactions contemplated by any or more of the Fries Withdrawal or the Fries
Withdrawal Documents, and no Governmental Authority shall have instituted, or
notified the Interested Persons of its intention to institute, any suit,
investigation or proceeding seeking to nullify, render ineffective or attack on
any substantive grounds the legality of any one or more of the Partnership
Agreement or the Fries Withdrawal Documents. All acts, consents, documents and
other matters, other than the giving of notice of exercise of the Fries
Withdrawal and the execution and delivery of the Fries Withdrawal Documents,
required by the Partnership Agreement to be taken or obtained in connection with
the Fries Withdrawal and the Fries Withdrawal Closing shall have been taken or
obtained.
10.2 Conditions to Obligations of the Owners. The obligations of each of
Hercules and Mallinckrodt to consummate the transactions contemplated by the
Transaction Documents are subject to the satisfaction or waiver by each Hercules
and Mallinckrodt in writing of each of the following conditions precedent:
10.2.1 Accuracy of Representations and Warranties. The representations
and warranties of the Interested Persons made in this Agreement shall be true
and correct in all material respects on the Closing Date.
10.2.2 Performance of Agreements. The Interested Persons shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants and conditions contained in this
Agreement to be performed and complied with by it on or prior to the Closing
Date.
10.2.3. Officer's Certificate. Each of the Owners shall have received
from each Interested Person a certificate dated the Closing Date signed by a
duly authorized officer of
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each of the Interested Persons delivering such certification and certifying that
the representations and warranties of the Interested Persons made herein are
true and correct in all material respects on the Closing Date as if made at and
as of such date and that the Interested Person sending such certificate has
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants and conditions contained in this
Agreement to be performed or complied with by it at or prior to the Closing
Date.
10.2.4 Applicable Law; Governmental Approvals; Filings. No provision
of any applicable law or regulation and no judgment, injunction, order or decree
shall prohibit the consummation of the Closing. The licenses, permits, consents
and approvals of Governmental Authorities required by law for the consummation
of the transactions contemplated by each of the Transaction Documents and listed
in APPENDIX K hereto shall have been obtained in form and substance reasonably
satisfactory to the Owners and shall not have been revoked, and any applicable
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as
amended, relating to the transactions contemplated hereby shall have expired or
been terminated.
10.2.5 Litigation; Governmental Action. There shall not be pending or
in force on the Closing Date any injunction, order or decree, or any complaint
of any Governmental Authority praying for an order or decree, restraining or
enjoining the consummation of the transactions contemplated by any one or more
of the Transaction Documents, and no Governmental Authority shall have
instituted, or notified either of Hercules or Mallinckrodt of its intention to
institute, any suit, investigation or proceeding seeking to nullify, render
ineffective or attack on any substantive grounds the legality of any one or more
of the Transaction Documents and all of the conditions precedent to the
obligations of F&F set forth in the F&F Transaction Agreement shall have been
satisfied or waived in writing by F&F.
10.2.6 Transaction Agreement Conditions. Each of the Transaction
Documents and the F&F Transaction Agreement shall have been executed by each
party thereto, and all of the conditions precedent to the obligations of
Hercules and HNBV set forth in the Hercules Transaction Agreement shall have
been satisfied or waived in writing by Hercules and HNBV and all of the
conditions precedent to the obligations of Mallinckrodt set forth in the
Contribution Agreement and the F&F Transaction Agreement shall have been
satisfied or waived in writing by Mallinckrodt.
10.2.7 Designated Transaction Closing. The closing of the transactions
contemplated by each of the Designated Transaction Agreements shall have
occurred and been completed.
10.2.8 Withdrawal Approval; Litigation. No provision of any applicable
law or regulation and no judgment,
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injunction, order or decree shall prohibit the consummation of the Fries
Withdrawal Closing. The licenses, permits, consents and approvals of
Governmental Authorities required by law for the consummation of the Fries
Withdrawal Closing and listed in APPENDIX K hereto shall have been obtained in
form and substance reasonably satisfactory to the Owners and shall not have been
revoked, and any applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976, as amended, relating to the Fries Withdrawal
shall have expired or been terminated. There shall not be pending or in force on
the Fries Withdrawal Closing any injunction, order or decree, or any complaint
of any Governmental Authority praying for an order or decree, restraining or
enjoining the consummation of the transactions contemplated by any one or more
of the Fries Withdrawal or the Fries Withdrawal Documents, and no Governmental
Authority shall have instituted, or notified either of Hercules or Mallinckrodt
of its intention to institute, any suit, investigation or proceeding seeking to
nullify, render ineffective or attack on any substantive grounds the legality of
any one or more of the Partnership Agreement or the Fries Withdrawal Documents.
All acts, consents, documents and other matters, other than the giving of notice
of exercise of the Fries Withdrawal and the execution and delivery of the Fries
Withdrawal Documents, required by the Partnership Agreement to be taken or
obtained in connection with the Fries Withdrawal and the Fries Withdrawal
Closing shall have been taken or obtained.
10.3 Extension of the Closing Date. In the event a condition precedent set
forth in Section 10.1 or 10.2 of this Agreement is not satisfied or waived in
writing by the beneficiary thereof on or before the date established by the
parties as the Closing Date for reasons beyond the reasonable control of the
party responsible for satisfying such condition, and such condition, in the
reasonable opinion of the party who is responsible for satisfying such
condition, is capable of being satisfied prior to the Closing Deadline, the
Closing Date shall be extended, but not beyond the Closing Deadline, to a date
determined in good faith by the party or parties responsible for satisfying such
condition. The party responsible for satisfying such condition shall use its
reasonable best efforts in such case to cause such condition precedent to be
satisfied, and all parties shall use their respective reasonable best efforts to
obtain an extension of time from any Governmental Authority whose approval or
consent to the consummation of the transactions contemplated by any of the
Transaction Documents is required and will expire prior to the extended Closing
Date.
11. MISCELLANEOUS
11.1 Termination and Cancellation. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to Closing:
11.1.1 By the mutual written consent of the parties
hereto;
11.1.2 By any party hereto if neither the
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terminating party nor an Affiliate of the terminating party is then in material
breach of its obligations under any of the Transaction Documents or the D&F
Transaction Agreements and if the Closing Date has not occurred on before the
Closing Deadline;
11.1.3 By any of Hercules, Mallinckrodt, Roche or GRI if any of the
D&F Transaction Agreements, the Hercules Transaction Agreement or the
Contribution Agreement is terminated in accordance with the terms thereof prior
to consummation of the transactions contemplated thereby;
11.1.4 By the Interested Persons if any of the conditions precedent
set forth in Section 10.1 have not been satisfied on or before the date
established by the parties as the Closing Date (as the same may be extended
pursuant to Section 10.3);
11.1.5 By either of Hercules or Mallinckrodt if any of the conditions
precedent set forth in Section 10.2 have not been satisfied on or before the
date established by the parties as the Closing Date (as the same may be extended
pursuant to Section 10.3);
11.1.6 By any party hereto not then in material breach of its
obligations hereunder if another party hereto (other than an Affiliate of the
terminating party) has materially breached any covenant herein, such breach is
within the reasonable control of the breaching party and either (i) such breach
is not capable of being cured or corrected, or (ii) the breaching party has not
cured or corrected such breach within ten (10) days after receipt of notice of
such breach;
11.1.7 By any party hereto if there shall be any law or regulation
adopted subsequent to the date hereof that makes consummation of the
transactions contemplated hereby illegal or otherwise prohibited or if
consummation of the transactions contemplated hereby would violate any
nonappealable final order, decree or judgment of any court or governmental body
having competent jurisdiction; or
11.1.8 By any of the Owners or the Interested Persons, if following
substantial compliance with any request for additional information or
documentary material pursuant to Section 7A(e)(2) of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, any such party or its affiliates shall have
received any communication from the Department of Justice or Federal Trade
Commission (each an "HSR AUTHORITY") (which communication shall be confirmed to
the other parties by the HSR Authority) that causes such party to reasonably
believe that any HSR Authority has authorized the institution of litigation
challenging the transactions contemplated by any of the Transaction Documents,
the D&F Transaction Agreements and the Partnership Agreement under the U.S.
antitrust laws, which litigation will include a motion seeking an order or
injunction prohibiting the consummation of any of the transactions contemplated
by the Transaction Documents, the D&F Transaction Agreements and the Partnership
Agreement.
11.2 Effect of Termination. Upon any termination of this Agreement, each
party hereto shall bear all expenses incurred by it in connection with the
negotiation, preparation, execution and performance of this Agreement. No such
termination shall relieve any party hereto of any liability for a breach of or
default under this Agreement, which liability, including all expenses of each
party hereto incurred in connection with the negotiation, preparation, execution
and
79
performance of this Agreement. No such termination shall relieve any party
hereto of any liability for a breach of or default under this Agreement, which
liability, including all expenses of each party hereto incurred in connection
with the negotiation, preparation, execution and performance of this Agreement,
shall continue notwithstanding such termination. The provisions of Section 6.4
hereof shall survive any termination of this Agreement.
11.3 Notices. All notices, requests, consents, approvals, waivers and other
communications hereunder shall be in writing and shall be deemed given or
delivered on the earlier of: (i) the date actually received if properly
addressed and delivered to the addresses for notices specified herein,
regardless of how sent; or (ii) five (5) business days after being mailed by
United States certified or registered mail, return receipt requested, with
postage prepaid, in each case addressed in accordance with the following:
11.3.1 Hercules Notice Address: Notices and other communications to
Hercules shall be sent to the following addresses:
Hercules Incorporated
Hercules Plaza
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx XxxXxxxxx,
Senior Vice President and CEO
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a required copy to:
Hercules Incorporated
Hercules Plaza
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Assistant General Counsel and
Corporate Secretary
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
or to such other addresses as Hercules may from time to time designate in a
notice pursuant to this Section 11.3.
11.3.2 Mallinckrodt Notice Address. Notices and other communications
to Mallinckrodt shall be sent to the following addresses:
Mallinckrodt Inc.
000 XxXxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
President and Chief Operating
Officer
Telephone No.: 000-000-0000
80
Facsimile No.: 000-000-0000
with a required copy to:
Mallinckrodt Inc.
000 XxXxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Vice President and General
Counsel
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
or to such other addresses as Mallinckrodt may from time to time designate in a
notice pursuant to this Section 11.3.
11.3.3 Roche Notice Address. Notices and other communications to Roche
shall be sent to the following addresses:
Roche Holdings, Inc.
00 Xxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a required copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
or to such other addresses as Roche may from time to time designate in a notice
pursuant to this Section 11.3.
11.3.4 GRI Notice Address. Notices or other communications to GRI
shall be sent to the following addresses:
Givaudan-Roure (International) SA
0, Xxxxxx xx xx Xxxxxxxxxx
XX-0000 Xxxxxxx, Xxxxxx
Attention: Xxxxxx Xxxx
Telephone No.: 000-00-00-000-0000
Facsimile No.: 011-41-22-780-9152
with a required copy to:
Xxxxx, Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
or to such other addresses as GRI may from time to time designate
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in a notice pursuant to this Section 11.3.
11.4 Assignment. None of Hercules, Mallinckrodt, Roche or GRI shall assign
this Agreement, or any rights hereunder, by operation of law or otherwise,
without the prior written consent of all other parties hereto; provided that,
without the prior written consent of Mallinckrodt and Hercules, either Roche or
GRI may assign its respective rights under this Agreement, in whole or from time
to time in part, to one or more of its Affiliates, however, no such assignment
shall relieve Roche or GRI from responsibility or liability hereunder.
11.5 Waiver. No waiver of any provision hereof shall be effective unless
such waiver is set forth in a writing signed by the party to be charged thereby
and all other parties are provided notice thereof, and then such written waiver
shall be effective only in the instance and for the purpose specified therein.
No failure or delay on the part of any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.
11.6 Amendments. This Agreement may be amended or modified in whole or in
part only by a duly authorized written agreement that refers to this Agreement
and is signed by all of the parties hereto.
11.7 Limitations on Rights of Third Parties. Nothing expressed or implied
in this Agreement is intended or shall be construed to confer upon or give any
person or entity other than Hercules, Mallinckrodt and the Interested Persons
any rights under this Agreement.
11.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York of the United
States of America, without giving effect to its conflict of law principles.
11.10 Entire Agreement. The Transaction Documents constitute and contain
the entire agreements among Hercules, Mallinckrodt and the Interested Persons
and their respective subsidiaries with respect to the subject matter hereof and
thereof and supersede all other agreements, written or oral, made prior to the
date hereof, or contemporaneously herewith and relating to the transactions
contemplated by such Transaction Documents. No representation, warranty,
covenant or agreement relating to the transactions contemplated by the
Transaction Documents shall be binding upon any party hereto unless expressly
82
set forth in such Transaction Documents, and then only to the extent so provided
in such agreements.
83
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HERCULES INCORPORATED
By_________________________________
Name_______________________________
Title______________________________
MALLINCKRODT INC.
By_________________________________
Name_______________________________
Title______________________________
GIVAUDAN-ROURE (INTERNATIONAL) SA
By_________________________________
Name_______________________________
Title______________________________
ROCHE HOLDINGS, INC.
By_________________________________
Name_______________________________
Title______________________________
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APPENDIX D - TAX ANNEX
TAXES
1. TAX DEFINITIONS
1.1. Capitalized Terms. The following capitalized terms used in this
Appendix D and in the Partnership Agreement, any Transaction Document or any D&F
Transaction Agreement, unless otherwise defined, shall have the following
meanings:
1.1.1. "ACCOUNTING REFEREE" shall have the meaning ascribed to such
term in Section 2.2 of this Appendix D.
1.1.2. "ADJUSTED BASELINE" shall mean the present value, as of the
Fries Withdrawal Date, of the net Tax benefit or detriment to the Interested
Persons and their Affiliates which is attributable to the difference between (i)
the basis of F&F or any F&F Affiliate, as determined for United States federal
income Tax purposes, in the Inventory and the Wasting Assets acquired as part of
a Fries Withdrawal immediately following such Withdrawal, assuming the Fries
Withdrawal is treated as the liquidation of a partner's interest in a
partnership under sections 731, 732, and 751 of the Code, computed pursuant to
Section 2.2 of this Appendix D and in accordance with the assumptions set forth
in Section 2.1 of this Appendix D, and (ii) Tastemaker's basis in the Inventory
and Wasting Assets immediately prior to such Fries Withdrawal.
1.1.3. "ADJUSTMENT FRACTION" shall have the meaning ascribed to such
term in Section 5.2(a) of this Appendix D.
1.1.4. "AMORTIZABLE INTANGIBLE" shall have the meaning ascribed to
such term in Section 2.1(vi) of this Appendix D.
1.1.5. "AUDITED PARTY" shall have the meaning ascribed to such term in
Section 4.8(c) of this Appendix D.
1.1.6. "BUILDING" shall mean any "nonresidential real property" (as
such term is defined in Section 168(e)(2)(B) of the Code).
1.1.7. "COMPANY TAX RETURN" shall mean any Tax Return required to be
filed (i) by or on behalf of a Company and (ii) with respect to a Pre-Closing
Tax Period or Short Period.
1.1.8. "CONTESTANT" has the meaning set forth in Section 4.8(a) of
this Appendix D.
1.1.9. "ELECTION DEADLINE" has the meaning set forth in Section
4.8(b)(1) of this Appendix D.
1.1.10 "EQUIPMENT" shall mean any "3-year property," "5-year
property," "7-year property," "10-year property,"
85
"15-year property," or "20-year property" (as such terms are defined in Section
168(e) of the Code).
1.1.11. "F&F AFFILIATE" shall mean any Affiliate of F&F to whom F&F
transfers a portion of its partnership interest in Tastemaker and to whom real
estate assets are transferred as part of a Fries Withdrawal.
1.1.12. "F&F GROUP" shall have the meaning ascribed to such term in
Section 4.1(a) of this Appendix D.
1.1.13. "F&F INTANGIBLES" shall mean, collectively, each Intangible
(other than "Previously Amortizable F&F Intangibles") contributed by F&F to the
capital of Tastemaker.
1.1.14. "F&F TAX RETURN" shall mean any Tax Return required to be
filed (i) by or on behalf of F&F and (ii) with respect to a Pre-Closing Tax
Period or Short Period.
1.1.15. "FINAL DETERMINATION" shall mean (i) any final determination
of liability in respect of a Tax (or any final determination in respect of a
decrease in or adjustment to any loss, deduction, credit or other Tax asset)
that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of a
statute of limitations or a period for the filing of claims for refunds, amended
returns or appeals from adverse determinations), (ii) the payment of Tax by an
Interested Person, an Owner or any Affiliate of an Interested Person or Owner,
whichever is responsible for payment of such Tax under applicable law, with
respect to any item disallowed or adjusted by a Governmental Authority, or the
entry into a legally binding settlement or compromise agreement in respect of a
decrease in or adjustment to any loss, deduction, credit or other Tax asset,
provided that such responsible party determines in good faith that no action
should be taken to recoup such payment of Tax or to further contest such
decrease in or adjustment to a Tax asset, and (iii) the final determination made
by the Private Mediator pursuant to such Section 4.8(b) of this Appendix D with
respect to a Tax Claim; provided, in the case of any final determination
described in clause (i) or any payment of Tax described in clause (ii), that if
any Owner makes a timely Private Contest Election pursuant to Section 4.8(b) of
this Appendix D, such determination or payment shall not be a Final
Determination.
1.1.16. "FRIES WITHDRAWAL" shall have the meaning ascribed to such
term in Section 8.3 of the Partnership Agreement.
1.1.17. "FRIES WITHDRAWAL DATE" shall have the meaning ascribed to
such term in Section 8.5 of the Partnership Agreement.
1.1.18. "HERCULES INTANGIBLES" shall mean, collectively, each
Intangible contributed by Hercules to the
86
capital of Tastemaker.
1.1.19. "HERCULES TAX" shall mean any Restructuring Tax resulting from
the transactions undertaken pursuant to the Hercules Transaction Agreement.
1.1.20. "INITIAL BASELINE" shall mean $95,000,000.
1.1.21. "INTANGIBLE" shall mean any "Section 197 intangible" (as such
term is defined in Sections 197(d) and (e) of the Code), and any other
intangible asset which is subject to amortization for United States federal
income tax purposes pursuant to a provision of the Code other than Section 197.
1.1.22. "INVENTORY" shall mean any item which is properly includible
in inventory pursuant to Section 471 of the Code and applicable Treasury
Regulations.
1.1.23. "KEEPWELL AGREEMENT" shall have the meaning ascribed to such
term in Section 6.3 of the Contribution Agreement.
1.1.24. "LETTER OF CREDIT" shall have the meaning ascribed to such
term in Section 10.2.7 of the Contribution Agreement.
1.1.25. "MALLINCKRODT TAX" shall mean any Taxes of F&F and any
Restructuring Tax resulting from the transactions undertaken pursuant to the F&F
Transaction Agreement or the Contribution Agreement.
1.1.26. "OTHER OPEN YEARS" shall have the meaning ascribed to such
term in Section 5.2(c) of this Appendix D.
1.1.27. "OWNERS' BASELINE CALCULATIONS" shall have the meaning
ascribed to such term in Section 2.2 of this Appendix D.
1.1.28. "PARTNERSHIP INTANGIBLES" shall mean, collectively, the F&F
Intangibles, the Hercules Intangibles, the Previously Amortizable F&F
Intangibles, and the Tastemaker Intangibles.
1.1.29. "PARTNERSHIP RETURN" shall have the meaning ascribed to such
term in Section 4.1(c) of this Appendix D.
1.1.30. "POST-CLOSING TAX PERIOD" shall have the meaning ascribed to
such term in Section 4.3 of this Appendix D.
1.1.31. "POST-DETERMINATION RECOMPUTED BASELINE" shall mean, with
respect a Redetermination Event as a result of which the Owners or Interested
Persons are obligated to make a payment pursuant to Section 5.2 of this Appendix
D, the Recomputed Baseline as computed immediately following such
Redetermination Event.
87
1.1.32. "PRE-CLOSING TAX PERIOD" shall have the meaning ascribed to
such term in Section 4.1(a) of this Appendix D.
1.1.33. "PRE-DETERMINATION RECOMPUTED BASELINE" shall mean, with
respect a Redetermination Event as a result of which the Owners or Interested
Persons are obligated to make a payment pursuant to Section 5.2 of this Appendix
D, the Recomputed Baseline as computed immediately prior to such Redetermination
Event, not taking into account all payments which (A) are treated for Tax
purposes as adjustments to the consideration paid or delivered pursuant to the
D&F Transaction Agreements or Transaction Documents or to assets received by F&F
or any F&F Affiliate or contributed to Tastemaker in connection with a Fries
Withdrawal pursuant to Section 7 of this Appendix D, (B) do not constitute
Redetermination Events and (C) have not previously been taken into account in
determining any Post-Determination Recomputed Baseline for purposes of Section
5.2(a) of this Appendix D upon the occurrence of any Redetermination Event.
1.1.34. "PREVIOUSLY AMORTIZABLE F&F INTANGIBLES" shall mean,
collectively, each Intangible contributed by F&F to the capital of Tastemaker
which, immediately prior to such contribution, was subject to amortization for
United States federal income tax purposes.
1.1.35. "PRIVATE APPEAL" shall have the meaning ascribed to such term
in Section 4.8(b)(2) of this Appendix D.
1.1.36. "PRIVATE CONTEST ELECTION" shall have the meaning ascribed to
such term in Section 4.8(b)(1) of this Appendix D.
1.1.37. "PRIVATE MEDIATOR" shall mean the individual appointed
pursuant to Section 4.8(b)(2) of this Appendix D, which individual is an
attorney and is either (i) a former United States Tax Court judge or (ii) in
private practice and a nationally recognized expert in the field of United
States federal income taxation.
1.1.38. "PRIVATE TRIAL" shall have the meaning ascribed to such term
in Section 4.8(b)(2) of this Appendix D.
1.1.39. "RECOMPUTED BASELINE" shall mean, at any time, the Adjusted
Baseline, recomputed by making such modifications to the assumptions,
methodology and information to which Section 2.1 of this Appendix D refers
(other than the items specified in clauses (i), (ii), (iii), (iv), (v), (vi),
(vii), (viii), (ix), (x), clause (C) of (xvii), (xviii), (xix), (xx), and (xxi)
of such Section 2.1) as are necessary in order fully to take into account all
events occurring prior to such time; provided, that in making such
recomputation, no modifications shall be made with respect to the assumptions,
methodology and information to which such Section 2.1 refers when computing the
net tax benefit or detriment to the Interested Persons and their Affiliates that
is
88
attributable to taxable periods of F&F, Roche or any Roche Affiliate (other
than taxable periods which are the subject of the Tax Claim, if any, resulting
in the Redetermination Event) for which, as of such time, the statute of
limitations (giving effect to any waiver, mitigation or extension thereof) has
expired; and provided further, that no change in law which occurs between the
times of determination of the Adjusted Baseline and the Recomputed Baseline
shall be taken into account.
1.1.40. "REDETERMINATION EVENT" shall mean (i) any Final Determination
or (ii) any payment of any amount (other than the payment of an amount pursuant
to Section 5.2 of this Appendix D) by the Owners or the Interested Persons which
is treated by the parties for Tax purposes as an adjustment to aggregate
consideration paid or delivered pursuant to the D&F Transaction Agreements and
the Transaction Documents or the total value of the assets received by F&F or
any F&F Affiliate or contributed to Tastemaker in connection with a Fries
Withdrawal pursuant to Section 7 of this Appendix D and which exceeds $1
million, in each case so long as the Final Determination described in clause (i)
or the payment described in clause (ii) results in a Post-Determination
Recomputed Baseline which differs from the corresponding Pre-Determination
Recomputed Baseline.
1.1.41. "RESTRUCTURING TAX" shall mean any Tax resulting from the
transactions undertaken pursuant to the Transaction Documents, the D&F
Transaction Agreements or the Partnership Agreement (including, without
limitation, a Fries Withdrawal).
1.1.42. "ROCHE AFFILIATE" shall mean any Affiliate of Roche.
1.1.43. "SECTION 351 LOSS" shall have the meaning ascribed to such
term in Section 5.3 of this Appendix D.
1.1.44. "SHORT PERIOD" shall mean the portion of any Straddle Period
ending at the end of the Closing Date.
1.1.45. "STEP-UP ADJUSTMENT" shall mean the amount, if any, by which
the Initial Baseline exceeds the Adjusted Baseline.
1.1.46. "STEP-UP GAIN" shall have the meaning ascribed to such term in
Section 5.2(b) of this Appendix D.
1.1.47. "STEP-UP LOSS" shall have the meaning ascribed to such term in
Section 5.2(a) of this Appendix D.
1.1.48. "STEP-UP TAX" shall mean any liability for Tax (or any refund
claim), a Final Determination in respect of which will result in the Owners or
Interested Persons being required to indemnify the Interested Persons, the
Owners or the Interested Persons' and Owners' respective Affiliates, as the case
may be, pursuant to Section 5.2 of this Appendix D.
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1.1.49. "STRADDLE PERIOD" shall have the meaning ascribed to such term
in Section 4.1(a) of this Appendix D.
1.1.50. "SUBSEQUENT LOSS" shall have the meaning ascribed to such term
in Section 4.2(d) of this Appendix D.
1.1.51. "TASTEMAKER INTANGIBLES" shall mean, collectively, each
Intangible of Tastemaker other than the F&F Intangibles, the Hercules
Intangibles, and the Previously Amortizable F&F Intangibles.
1.1.52. "TASTEMAKER REFINANCED DEBT" shall have the meaning ascribed
to such term in Section 4.9(a) of this Appendix D.
1.1.53. "TAX" means (i) any federal, state, local or foreign income,
profits, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad valorem,
transfer, stamp, capital stock or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty or addition to tax imposed by any
Governmental Authority, (ii) liability of F&F or a Company for the payment of
any amounts of the type described in Clause (i) above as a result of being a
member of an affiliated, consolidated, combined or unitary group, or being a
party to any agreement or arrangement whereby liability of F&F or such Company,
as the case may be, for payments of such amounts was determined or taken into
account with reference to the liability of any other person for any Pre-Closing
Tax Period or Straddle Period, and (iii) liability of F&F or a Company for the
payment of any amounts as a result of being party to any Tax sharing,
allocation, compensation or like agreement or arrangement binding, as the case
may be, F&F or such Company or with respect to the payment of any amounts of the
type described in Clauses (i) or (ii) above as a result of any express or
implied obligation to indemnify any other entity or individual.
1.1.54. "TAX CLAIM" has the meaning set forth in Section 4.8(a) of
this Appendix D.
1.1.55. "TAX INDEMNIFICATION PERIOD" means (i) with respect to any Tax
described in Clause (i) of the definition of "Tax," any Pre-Closing Tax Period
or Short Period of F&F or a Company, (ii) with respect to any Tax described in
Clause (ii) of the definition of "Tax," any Pre-Closing Tax Period or Short
Period of F&F or a Company and the taxable period of any member of a group
described in such Clause (ii) which includes (but does not end on) the Closing
Date, (iii) with respect to any Tax described in Clause (iii) of the definition
of "Tax", the survival period of the obligation under the applicable contract or
arrangement.
1.1.56. "TAX LOSS" shall have the meaning ascribed to such term in
Section 5.1(a) of this Appendix D.
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1.1.57. "TAX RETURN" shall mean any return, report or similar
statement (including any attached schedules) required to be filed with any
Governmental Authority and relating to Taxes, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Taxes.
1.1.58. "TRANSFER TAX" shall have the meaning ascribed to such term in
Section 4.7 of this Appendix D.
1.1.59. "WASTING ASSET" shall mean any Equipment, Partnership
Intangible or Building.
1.2. Capitalized Terms Not Defined in Appendix D. Capitalized terms used in
this Appendix D and not otherwise defined in this Appendix D shall have the
meanings ascribed to such terms in this Agreement.
2. ADJUSTED BASELINE
Section 2.1. Assumptions Used in Determination of Adjusted Baseline. The
Adjusted Baseline shall be determined in accordance with the following
assumptions, methodology and information:
(i) A discount rate of 6 percent, compounded quarterly, shall be
used;
(ii) The effective tax rate for the Interested Persons shall be 38
percent;
(iii) In respect of Inventory of Tastemaker transferred to F&F or an
Affiliate of F&F upon a Fries Withdrawal, such Inventory shall be
taken into account to reduce gross income during the taxable
period in which such Fries Withdrawal occurs;
(iv) The "applicable recovery period" (as such term is used in Section
168 of the Code) for any Buildings transferred to F&F or any F&F
Affiliate as part of a Fries Withdrawal shall be 39 years;
(v) The "applicable recovery period" (as such term is used in Section
168 of the Code) for any Equipment transferred to F&F as part of
a Fries Withdrawal shall be (u) with respect to such Equipment as
is "3-year property" (as such term is used in Section 168 of the
Code), 3 years; (v) with respect to such Equipment as is "5-year
property" (as such term is used in Section 168 of the Code), 5
years; (w) with respect to such Equipment as is "7-year property"
(as such term is used in Section 168 of the Code), 7 years; (x)
with respect to such
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Equipment as is "10-year property" (as such term is used in
Section 168 of the Code), 10 years; (y) with respect to such
Equipment as is "15-year property" (as such term is used in
Section 168 of the Code), 15 years; and (z) with respect to such
Equipment as is "20-year property" (as such term is used in
Section 168 of the Code), 20 years;
(vi) The amortization period for any Partnership Intangibles which are
(A) transferred to F&F as part of a Fries Withdrawal and (B)
amortizable by F&F pursuant to Section 197(a) of the Code (such
Intangibles, "Amortizable Intangibles"), shall be 15 years;
(vii) Each Wasting Asset transferred to F&F or any F&F Affiliate as
part of a Fries Withdrawal shall be treated as being held by F&F
or such F&F Affiliate, as the case may be, for the entire
amortization period or applicable recovery period, if any, for
such Wasting Asset;
(viii) Amortization deductions attributable to any Amortizable
Intangible shall be determined by using the straight line method;
(ix) Depreciation deductions for any Equipment or Building shall be
determined by using the "applicable depreciation method" for such
property specified in Section 168 of the Code and by assuming
that (x) no election is made under Section 168(b)(5) of the Code
and (y) F&F or any F&F Affiliate, as the case may be, is a
calendar year taxpayer with no assets other than those acquired
as part of the Fries Withdrawal;
(x) The amount claimed as a depreciation or amortization deduction in
any taxable period with respect to a Wasting Asset transferred to
F&F or any F&F Affiliate as part of a Fries Withdrawal shall be
determined: (A) in the case of Buildings or Equipment, by
applying the "applicable convention" (as such term is used in
Section 168(d) of the Code and construed by the Internal Revenue
Service in currently applicable administrative guidance,
including Revenue Procedure 89-15) for such property; (B) in the
case of any Amortizable Intangibles, beginning with the month in
which such Fries Withdrawal occurs; and (C) in the case of other
Partnership Intangibles amortizable under Sections of the Code
other than Section 197(a), as appropriate under applicable law;
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(xi) For United States federal income Tax purposes, none of the
difference between (A) the aggregate basis to F&F, determined
immediately after a Fries Withdrawal, of the F&F Intangibles
transferred to F&F as part of such Withdrawal, and (B) the
aggregate basis to Tastemaker, determined immediately prior to a
Fries Withdrawal, of such Intangibles, shall be attributable to
Amortizable Intangibles;
(xii) For United States federal income Tax purposes, 50 percent (50%)
of the difference between (A) the aggregate basis to F&F,
determined immediately after a Fries Withdrawal, of the Hercules
Intangibles transferred to F&F as part of such Withdrawal, and
(B) the aggregate basis to Tastemaker, determined immediately
prior to a Fries Withdrawal, of such Intangibles, shall be
attributable to Amortizable Intangibles;
(xiii) For United States federal income Tax purposes, 50 percent (50%)
of the difference between (A) the aggregate basis to F&F,
determined immediately after a Fries Withdrawal, of the
Tastemaker Intangibles transferred to F&F as part of such
Withdrawal, and (B) the aggregate basis to Tastemaker, determined
immediately prior to a Fries Withdrawal, of such Intangibles,
shall be attributable to Amortizable Intangibles;
(xiv) For United States federal income Tax purposes, 100 percent (100%)
of the difference between (A) the aggregate basis to F&F,
determined immediately after a Fries Withdrawal, of the
Previously Amortizable F&F Intangibles transferred to F&F as part
of such Withdrawal, and (B) the aggregate basis to Tastemaker,
determined immediately prior to a Fries Withdrawal, of such
Intangibles, shall be attributable to Amortizable Intangibles;
(xv) For United States federal income Tax purposes, the basis to F&F
or any F&F Affiliate (as the case may be) of its interest in
Tastemaker, and the bases to Tastemaker of any Wasting Assets or
other property transferred by Tastemaker to F&F or such F&F
Affiliate as part of a Fries Withdrawal, determined as of the
time immediately prior to such Fries Withdrawal, shall be
computed (A) using all such Tax Returns, work papers, business
records and other materials as are possessed by or, in the
exercise of due diligence, can be
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obtained by the parties and (B) in accordance with all applicable
provisions of the Code and Treasury Regulations implementing such
provisions;
(xvi) For United States federal income Tax purposes, the basis to F&F
or any F&F Affiliate, as the case may be, determined as of the
time immediately after a Fries Withdrawal, of any property
transferred to F&F or such F&F Affiliate as part of such
Withdrawal shall be (A) computed, in the case of Inventory, in
accordance with Section 732(c)(1) of the Code and the Treasury
Regulations implementing such provision, (B) computed, in the
case of any other property, in accordance with Sections 751,
732(b) and 732(c)(2) of the Code and the Treasury Regulations
implementing such provisions, provided, however, that full effect
shall be given to any agreement reached by the Interested Persons
and Owners as to the value of any partnership unrealized
receivables, as set forth in Treasury Regulation Section
1.751-1(c)(3), and that any property of Tastemaker described in
Section 1231 of the Code shall be treated as excluded in its
entirety from the definition of inventory pursuant to Section
751(d)(2)(B) of the Code, and (C) depreciated or amortized as
rapidly as possible, in accordance with applicable law, to the
extent such recovery period and method is not otherwise provided
for in this Section 2.1;
(xvii) Each of the transactions contemplated by the Designated
Transaction Agreements shall be deemed to have occurred without
regard to whether such transaction actually occurs, unless the
failure of such transaction to occur was attributable to a
failure of an Owner or a Company to perform its obligations under
the relevant Agreement;
(xviii) The Adjusted Baseline shall be computed in a manner which takes
into account the payment required by Section 2.3 of this Appendix
D;
(xix) The Adjusted Baseline shall be determined without regard to any
change in law between the date hereof and the date on which the
Adjusted Baseline is determined;
(xx) Tax benefits and burdens are realized by the Interested Persons
and their Affiliates on a quarterly basis; and
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(xxi) The Interested Persons shall be deemed to have complied with the
covenants set forth in Section 4.9, regardless of whether the
Interested Persons in fact comply with such covenants.
Section 2.2. Procedure for Determination of Adjusted Baseline. Within 15
days following the date on which the Adjusted Aggregate Value is finally
determined pursuant to Section 2.6 of the Agreement, the Owners shall cause to
be prepared and delivered to the Interested Persons a good faith calculation of
the Adjusted Baseline and the Step-Up Adjustment (the "Owners' Baseline
Calculations"). The Owners' Baseline Calculations shall be based only on such
assumptions of fact or law as to which there is a reasonable basis. The Owners
shall promptly provide to the Interested Persons all relevant portions of all
Tax returns, work papers, procedures, and other materials relevant to the
Owners' Baseline Calculations as the Interested Persons may reasonably request.
Unless the Interested Persons timely object as specified in this Section 2.2,
the Owners' Baseline Calculations shall be binding on the parties for purposes
of Sections 2.3 and 2.4 of this Appendix D. The Interested Persons may object to
the Owners' Baseline Calculations only upon making a good-faith determination
that such Calculations are based on one or more (i) computational errors, (ii)
materially inaccurate factual assumptions, or (iii) legal conclusions that do
not provide a reasonable basis for the tax treatment of any item included in
such Calculations, provided, however, that the Interested Persons may,
notwithstanding the existence of such reasonable basis, disclose the treatment
of such item on any Tax Return if the Interested Persons provide Owners with
notice of the intent to make such disclosure at least thirty days prior to the
filing of such Tax Return and consult with Owners and/or Owners' counsel in good
faith regarding the necessity for such disclosure, and provided further,
however, that no such disclosure will be made if the Interested Persons have
received an opinion of nationally recognized tax counsel that it is more likely
than not that the treatment of such item will be respected for federal income
tax purposes. If the Interested Persons object to all or any part of the Owners'
Baseline Calculations, they shall within thirty days after receiving such
Calculations notify the Owners in writing that they so object. If a notice of
objection is duly delivered, the Interested Persons and the Owners shall
negotiate in good faith and use their best efforts to reach agreement as to the
computational, legal or factual question forming the basis for the Interested
Persons' objection. If the Interested Persons and the Owners are unable to reach
such agreement within twenty days after due delivery of such notice, the
parties' dispute shall be referred for resolution to the same Adjustment
Arbitrator as is selected by the parties pursuant to Section 2.6.1 of the
Agreement or, if no Adjustment Arbitrator is selected by the parties pursuant to
such Section 2.6.1, to a certified public
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accounting firm selected by the parties by applying the principles of such
provision (the "Accounting Referee"). The Accounting Referee shall determine any
item which is disputed by the parties (and only such items) in a manner
consistent with the terms of Section 2.1 of this Appendix D and shall apply such
procedures as such Accounting Referee may require in resolving the parties'
dispute. The parties agree to use their best efforts to cause the Accounting
Referee to resolve their dispute within 60 days after referral of the dispute to
such Accounting Referee. The costs, fees and expenses of the Accounting Referee,
to the extent incurred with respect to the parties' dispute over the calculation
of the Adjusted Baseline and the Step-Up Adjustment, shall be borne by the
Interested Persons, if such Referee resolves the parties' dispute in favor of
the Owners, and by the Owners, if such Referee resolves the parties' dispute in
favor of the Interested Persons. Upon the resolution pursuant to the procedures
set forth in this Section 2.2 of all disputed items relating to the calculation
of the Adjusted Baseline and the Step-Up Adjustment, the calculation of the
Adjusted Baseline and the Step-Up Adjustment pursuant to such resolution shall
be binding on the Interested Persons and the Owners for purposes of Sections 2.3
and 2.4 of this Appendix D.
Section 2.3. Payment of Step-Up Adjustment. Within 10 days after the
calculation of the Adjusted Baseline and the Step-Up Adjustment becomes binding
on the parties pursuant to Section 2.2 of this Appendix D, the Owners shall pay
to the Interested Persons, by wire transfer of immediately available funds, an
amount equal to the sum of (i) the Step-Up Adjustment and (ii) interest on the
Step-Up Adjustment from and including the Closing Date to but excluding the date
of payment at a rate per annum equal to the rate of interest announced by Xxxxxx
Guaranty Trust Company of New York from time to time as its Base Rate in New
York City in effect from time to time during the period from the Fries
Withdrawal Date to the date of payment. Such interest shall be payable at the
same time as the payment to which it relates and shall be calculated daily on
the basis of a year of 365 days and the total number of days elapsed.
Section 2.4. Adjusted Baseline Reflected on Tax Returns.
All Tax Returns filed by or on behalf of the Owners, the Interested Persons or
any of the Owners' or Interested Persons' Affiliates (including Tastemaker)
shall be consistent with the calculation of the Adjusted Baseline (including all
assumptions, methodology and information on which such Adjusted Baseline is
based, other than the items specified in clauses (ii), (iii), (vii), clauses (x)
and (y) of (ix), (xvii), and (xxi) of Section 2.1 of this Appendix D) which
becomes binding pursuant to Section 2.2 of this Appendix D; provided, that the
Owners, the Interested Persons and the Owners' and Interested Persons'
Affiliates each shall file or cause to be filed on its behalf Tax Returns which
take into account any changes in law, any event described in clauses (i) and
(ii) of the definition of "Final Determination"
96
binding on the party filing such Returns, any payment by the Interested Persons
or Owners treated for Tax purposes as an adjustment to the consideration paid or
delivered pursuant to the D&F Transaction Agreements or the Transaction
Documents or assets received by F&F or any F&F Affiliate or contributed to
Tastemaker in connection with a Fries Withdrawal. If any Tax Return filed by a
party prior to the time at which the calculation of the Adjusted Baseline
becomes binding is inconsistent with such calculation of the Adjusted Baseline,
then such party shall, to the extent permissible or required under applicable
law, file an amended Tax Return which is consistent with such calculation of the
Adjusted Baseline.
3. REPRESENTATIONS
Hercules and Mallinckrodt, jointly and severally, represent and warrant to
the Interested Persons as of the date hereof and as of the Closing Date:
3.1. Valid Section 338 Elections. The acquisition by Tastemaker Finance
Inc. of the stock of each of Tastemaker Inc. (formerly called Consolidated
Flavor Corporation) and Cocoa Trading and Transport Company constituted, in the
case of each entity the stock of which was acquired, a "qualified stock
purchase" within the meaning of Section 338(d)(3) of the Code. In the case of
each acquisition described in the preceding sentence, a valid election was made
under Section 338(h)(10) of the Code.
4. COVENANTS
4.1. Responsibility for Periods Beginning Before Closing
Date. (a) With respect to jurisdictions in which F&F (i) is
required to file a consolidated, combined or unitary Tax Return with
Mallinckrodt or any consolidated, combined or unitary group of which F&F is a
member ("F&F Group") or (ii) is eligible to file a Tax Return with Mallinckrodt
or any member of the F&F Group and has filed such a Return in the most recent
taxable period for which a Return was due, Mallinckrodt shall include, or cause
to be included, F&F in such Tax Returns for all taxable periods ending at or
before the end of the Closing Date ("Pre-Closing Tax Periods") and all taxable
periods beginning prior to and ending after the Closing Date ("Straddle
Periods"). Items of income of F&F included in such Returns shall be determined
in accordance with principles of Treasury Regulation Section 1.1502-76(b)
applied to the portion of such period ending at the end of the Closing Date and
the portion of such period beginning on the day following the Closing Date,
including the application of Treasury Regulation Section 1.1502-76(b)(1)(ii)(B)
to treat transactions occurring after the consummation of the transactions
contemplated by the Contribution Agreement, including the transfer of any
interest in Tastemaker by F&F to any F&F
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Affiliate and a Fries Withdrawal pursuant to or in respect of the Partnership
Agreement, as occurring on the day following the Closing Date. F&F's share of
Tastemaker income for Straddle Periods shall each be allocated to the periods
before and after the consummation of the transactions contemplated by the
Contribution Agreement, as required by Treasury Regulation Section
1.1502-76(b)(2)(v), by applying the interim closing of the books method and the
principles of Treasury Regulation Section 1.1502-76(b), including the
application of Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) to treat
transactions occurring after the consummation of the transactions contemplated
by the Contribution Agreement, including the transfer of any interest in
Tastemaker by F&F to any F&F Affiliate and a Fries Withdrawal pursuant to or in
respect of the Partnership Agreement, as occurring on the day following the
Closing Date. Mallinckrodt shall timely prepare and file, or cause to be timely
prepared and filed, all such Tax Returns described in the first sentence of this
paragraph 4.1(a) with respect to Pre-Closing Tax Periods and Straddle Periods
referred to in this Section 4.1(a), subject to Roche's review and approval
(which approval shall not be unreasonably withheld) of the portions of such
Returns which relate to F&F. All Tax Returns prepared pursuant to this Section
4.1(a) shall be prepared or completed in a manner consistent with prior practice
of Mallinckrodt or F&F, as applicable, concerning the income, properties or
operations of F&F (including elections and accounting methods and conventions),
except as otherwise required by law. Mallinckrodt shall timely pay, or cause to
be timely paid, when due all Taxes relating to the Returns that it is required
to prepare and file pursuant to this Section 4.1(a).
(b) With respect to jurisdictions (i) in which F&F is required to file a
Tax Return and (ii) with respect to which Section 4.1(a) does not apply,
Mallinckrodt shall timely prepare and file, or cause to be timely prepared and
filed all such Tax Returns of F&F for all Pre-Closing Tax Periods and Roche
shall timely prepare and file or cause to be timely prepared and filed all such
Tax Returns for all Straddle Periods, subject to Mallinckrodt's review and
approval (which approval shall not be unreasonably withheld). Items of income of
F&F included in such Tax Returns shall be determined in accordance with
principles of Treasury Regulation Section 1.1502-76(b) applied to treat
transactions occurring after the consummation of the transactions contemplated
by the Contribution Agreement, including the transfer of any interest in
Tastemaker by F&F to any F&F Affiliate and a Fries Withdrawal pursuant to or in
respect of the Partnership Agreement, as occurring on the day following the
Closing Date. F&F shall timely pay, when due, all Taxes relating to the Tax
Returns prepared and filed pursuant to this Section 4.1(b). Mallinckrodt shall
reimburse F&F for any Taxes payable pursuant to this Section 4.1(b) for any
Pre-Closing Tax Period or any Straddle Period to the extent applicable to the
period ending at the end of the Closing Date determined under principles of
Treasury Regulation Section 1.1502-76(b) on or before the later of (i) with
respect to Taxes due under any Tax Returns prepared by Roche, fifteen days after
such Tax Returns have been sent to
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Mallinckrodt for approval, or (ii) within fifteen days prior to the date on
which the related tax liability is due. All Tax Returns prepared pursuant to
this Section 4.1(b) shall be prepared or completed in a manner consistent with
prior practice of F&F concerning the income, properties or operations of F&F
(including elections, accounting methods and conventions), except as otherwise
required by law.
(c) With respect to jurisdictions in which Tastemaker (i) is required to
file a partnership information Tax Return ("Partnership Return") or (ii) is
eligible to file a Partnership Return and has filed such a Return in the most
recent taxable period for which a Partnership Return was due, Hercules shall
timely prepare and file, or cause to be timely prepared and filed all such
Partnership Returns for all Pre-Closing Tax Periods and Straddle Periods,
subject to the Roche's review and approval (which approval shall not be
unreasonably withheld) of all Partnership Returns for Straddle Periods.
Partners' distributive shares of Tastemaker items of income, gain, loss,
deduction or credit shall be determined in accordance with Treasury Regulation
Section 1.706-1(c)(2)(ii) by applying the interim closing of the books method.
All Partnership Returns prepared pursuant to this Section 4.1(c) shall be
prepared or completed in a manner consistent with prior practice of Tastemaker
concerning the income, properties or operations of Tastemaker (including
elections, accounting methods and conventions), except as otherwise required by
law.
(d) With respect to jurisdictions (i) in which Tastemaker is required to
file a Tax Return and (ii) with respect to which Section 4.1(c) does not apply,
Hercules shall timely prepare and file, or cause to be timely prepared and filed
all such Tax Returns for all Pre-Closing Tax Periods and Straddle Periods,
subject to the Roche's review and approval (which approval shall not be
unreasonably withheld) of all Tax Returns for Straddle Periods. All Returns
prepared pursuant to this Section 4.1(d) shall be prepared or completed in a
manner consistent with prior practice of Tastemaker concerning the income,
properties or operations of Tastemaker (including elections, accounting methods
and conventions), except as otherwise required by law. Tastemaker shall pay all
Taxes relating to Tax Returns required to be prepared and filed pursuant to this
Section 4.1(d). Any Taxes of Tastemaker payable pursuant to such Tax Returns
shall be estimated and apportioned for purposes of determining the Working
Capital Adjustment, between the Owners, on the one hand, and the Interested
Persons on the other hand, in accordance with the principles of Treasury
Regulation Section 1.1502-76(b) applied as of the Adjustment Time.
(e) With respect to jurisdictions in which any one or more of the
Tastemaker Subsidiaries are required to file a Tax Return, the Owners shall
timely prepare and file, or cause to be timely prepared and filed, all such Tax
Returns for all Pre-Closing Tax Periods and the Interested Persons shall timely
file prepare and file, or cause to be timely filed, all such Tax Returns for all
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Straddle Periods, subject to the Owners' review and approval (which approval
shall not be unreasonably withheld). All Tax Returns prepared pursuant to this
Section 4.1(e) shall be prepared or completed in a manner consistent with prior
practices of the Tastemaker Subsidiaries concerning the income, properties or
operations of the Tastemaker Subsidiaries (including elections, accounting
methods and conventions), except as otherwise required by law. The Tastemaker
Subsidiaries shall pay all Taxes relating to Tax Returns required to be prepared
and filed pursuant to this Section 4.1(e). Any Taxes of Tastemaker Subsidiaries
payable pursuant to such Tax Returns shall be estimated and apportioned for
purposes of determining the Working Capital Adjustment, between the Owners, on
the one hand, and the Interested Persons on the other hand, in accordance with
the principles of Treasury Regulation Section 1.1502-76(b) applied to a portion
of such period ending as of the Adjustment time.
(f) With respect to jurisdictions in which Tastemaker B.V. or any
Tastemaker B.V. Subsidiary is required to file a Tax Return, the Owners shall
timely prepare and file, or cause to be timely prepared and filed, all such Tax
Returns for all Pre-Closing Tax Periods and GRI shall timely prepare and file,
or cause to be timely prepared and filed, all such Tax Returns for all Straddle
Periods, subject to Owners' review and approval (which approval shall not be
unreasonably withheld). All Tax Returns prepared pursuant to this Section 4.1(f)
shall be prepared or completed in a manner consistent with prior practices of
Tastemaker B.V. and the Tastemaker B.V. Subsidiaries concerning the income,
properties or operations of Tastemaker B.V. and the Tastemaker B.V. Subsidiaries
(including elections, accounting methods and conventions), except as otherwise
required by law. Tastemaker B.V. and the Tastemaker B.V. Subsidiaries shall pay
all Taxes relating to Tax Returns required to be prepared and filed pursuant to
this Section 4.1(f). Any Taxes of Tastemaker B.V. and the Tastemaker B.V.
Subsidiaries payable pursuant to such Tax Returns shall be estimated and
apportioned for purposes of determining the Working Capital Adjustment, between
the Owners, on the one hand, and GRI on the other hand, in accordance with the
principle of Treasury Regulation Section 1.1502-76(b) applied to the portion of
such period ending as of the Adjustment Time.
(g) No reference in this Section 4.1 to the principles of Treasury
Regulation Section 1.1502-76(b) contemplates the application of such Regulation
using the ratable allocation method described in Treasury Regulation Section
1.1502-76 (b)(2)(ii).
4.2. Refunds and Carrybacks. (a) Except as provided in Section 4.2(d), the
Owners shall be entitled to any refunds of Taxes paid by or on behalf of the
Companies (including refunds paid by means of a credit against other or future
Tax liabilities) arising or accruing with respect to, or relating to, items in
Pre-Closing Tax Periods or that portion of any Straddle
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Period ending at the Adjustment Time, to the extent in excess of the amount
shown, if any, as a Current Asset on the Accountants' Net Determination or a
Final Net Determination, as the case may be. Except as provided in Section
4.2(d), Mallinckrodt shall be entitled to any refunds of Taxes paid by or on
behalf of F&F (including refunds paid by means of a credit against other or
future Tax liabilities) arising or accruing with respect to, or relating to,
items in Pre-Closing Tax Periods or that portion of any Straddle Period ending
at the Adjustment Time.
(b) The Interested Persons shall be entitled to all other refunds of Taxes
paid by or on behalf of F&F and the Companies (including refunds paid by means
of a credit against other or future Tax liabilities).
(c) The Interested Persons shall cause F&F and the Companies to forward to
Owners or to reimburse Owners for any refunds due the Owners (pursuant to the
terms of this Section 4.2) within fifteen days after receipt thereof, and the
Owners shall forward to the Interested Persons or reimburse the Interested
Persons for any refunds due the Interested Persons (pursuant to the terms of
this Section 4.2) within fifteen days after receipt thereof. In the case of a
refund received in the form of a credit against other or future Tax liabilities,
reimbursement in respect of such refund shall be due in each case on the due
date for payment of the Taxes against which such refund has been credited.
(d) The Owners agree that if F&F or any of the Companies carries back any
item of loss, deduction or credit that arises in any Post-Closing Tax Period (a
"Subsequent Loss") into any taxable period beginning before the Closing Date,
then the Interested Persons shall be entitled to receive from the Owners a
payment in an amount equal to any Tax benefit or refund of Taxes received by the
Owners as a result thereof within fifteen days after the receipt of such benefit
or such refund.
(e) References to the Companies in subsections (b), (c) and (d) of this
Section 4.2 shall not include Tastemaker.
4.3. Responsibility for Taxable Periods Commencing After the Closing Date.
Subject to the provisions of Section 5 of this Appendix D, for taxable periods
commencing after the Closing Date (each a "Post-Closing Tax Period"), the
Interested Persons shall (i) be liable solely for all Taxes of F&F and the
Companies (other than Tastemaker) attributable thereto and (ii) pay or cause to
be paid the Taxes described in clause (i) together with any related costs. The
Interested Persons shall prepare and file or cause to be prepared and filed, all
Tax Returns of F&F and the Companies (other than Tastemaker) for Post-Closing
Tax Periods.
4.4. Cooperation. After the Closing Date, each of the
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Interested Persons and the Owners shall make available to the other, as
reasonably requested, and to any Governmental Authority, all information,
records and documents relating to Tax liabilities or potential Tax liabilities
relating to F&F and the Companies and shall preserve all such information,
records and documents until the expiration of any applicable statute of
limitations or extension thereof, or such longer period as is required by the
Agreement.
4.5. Tax Sharing. Any and all existing Tax sharing, allocation,
compensation or like agreements or arrangements that include F&F or any Company
shall terminate with respect to F&F or such Company, as the case may be, as of
the date hereof without liability to F&F or such Company.
4.6. No Real Property Holding Corporation; Partnership Election. Within 30
days prior to the Closing, the Owners shall deliver to the Interested Persons a
certification for each Company and signed by such Company to the effect that the
Company is not nor has it been within 5 years of the date hereof a "United
States real property holding corporation" as defined in Section 897 of the Code.
Prior to the Closing, the Owners shall deliver to the Interested Persons a copy
of the Form 8832 filed by Tastemaker B.V. pursuant to Treasury Regulation
301.7701-3(c) and Section 5.10 of the Agreement.
4.7. Transfer Taxes. The Interested Persons and Owners, respectively, shall
each bear 50% of the cost of all documentary, stamp, transfer, sales, excise or
other similar Taxes or recording fees, including without limitation any real
property transfer and real property gains Taxes ("Transfer Taxes") payable in
respect of the transactions contemplated in the Transaction Documents, the D&F
Transaction Agreements and the Partnership Agreement (including, without
limitation, the Fries Withdrawal).
4.8 Contest Rights With Respect to Indemnified Taxes. (a) In the event any
of the Interested Persons or any of their Affiliates (each a "Contestant")
receives any written notice of any potential claim or proposed adjustment that
could result in a Step-Up Tax or a Tax in respect of which either or both of the
Owners, as the case may be, would be required to indemnify the Interested
Persons or their Affiliates, as the case may be, pursuant to Section 5.1 of this
Appendix D (a "Tax Claim") and such Tax Claim arises in connection with an audit
of a Tax Return over which such Contestant has control by law or by agreement,
then this Section 4.8 shall apply unless such Contestant offers to cede control
of the audit of such Tax Claim to the Owners. In the event a Tax Claim is
subject to this Section 4.8(a), the Contestant shall (i) promptly notify each
Owner from whom an indemnity payment would be required (each such Owner being
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referred to herein both individually and collectively as an "Indemnitor") of
such Tax Claim and provide Indemnitor with relevant information thereto
(including a copy of any written notices and information document requests
received), provided that the failure to give such notice shall not diminish the
Indemnitor's obligation hereunder except to the extent that such failure results
in a material and adverse effect on the Indemnitor, (ii) forbear payment of the
Tax claimed for at least 30 days after giving such notice (provided such
forbearance is permitted by law), and (iii) advise Indemnitor of all action
taken or proposed to be taken by the relevant Governmental Authority. In
addition, to the extent such Tax Claim relates to an item or items which
reasonably could be considered to constitute "partnership items" within the
meaning of Section 6231 (a)(3) of the Internal Revenue Code and the Treasury
Regulation thereunder, the parties shall use their best efforts to cause the
Internal Revenue Service to remove such items from Contestant's audit (including
forbearing from entering into an extension agreement under Section 6229(b) of
the Code) and to instead treat such items as partnership items and determine the
tax treatment thereof pursuant to an audit of Tastemaker, in which case such
items shall no longer be subject to this Section 4.8(a). The decision regarding
whether or not such Tax Claim shall be contested is solely that of the
Contestant. If such Tax Claim is contested, the Contestant shall in good faith
and using its best efforts contest the claim or proposed adjustment, shall keep
the Indemnitor fully informed at all administrative and judicial stages of any
contest, shall consult in good faith with Indemnitor and Indemnitor's counsel
regarding the contest of such Tax Claim or proposed adjustment, and shall
provide Indemnitor and Indemnitor's counsel, at the Indemnitor's expense, with
the portions of drafts of all written petitions, briefs, and similar submissions
relating to Tax Claims indemnified by the Indemnitor hereunder. Such
proceedings, insofar as they relate to Tax Claims, shall be controlled jointly
by the Contestant and Indemnitor. Contestant shall use its best efforts to
permit Indemnitor to be present and represented by Indemnitor's counsel at any
meetings or proceedings. Decisions regarding the contest of such Tax Claim with
respect to tactics to be pursued in contesting such Tax Claim or substantive
legal matters relating to such Tax Claim shall be made jointly by Contestant and
Indemnitor. Notwithstanding any of the foregoing, a decision not to contest such
Tax Claim, a decision to refrain from seeking to cause an item relating to such
Tax Claim from being treated as a partnership item, a decision regarding the
terms of any settlement of such Tax Claim with the Internal Revenue Service or
other relevant Governmental Authority, a decision regarding whether to prosecute
such Tax Claim in the United States Tax Court, the United States Court of
Federal Claims, a United States District Court, or other available trial court
or similar judicial forum, or a decision not to appeal an adverse judicial
determination of a lower court, shall be made solely and exclusively by the
Contestant.
(b) (1) In the event that Indemnitor disagrees with any
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decision made by Contestant pursuant to the last sentence of Section 4.8(a)
above, Indemnitor's sole recourse is to elect the private contest resolution
procedures outlined in this Section 4.8(b); provided, however, that any refusal
or failure of Contestant to seek to cause an item giving rise to a Tax Claim to
be treated as a partnership item shall not be the subject of a proceeding
pursuant to this Section 4.8(b). If Indemnitor desires to proceed under this
Section 4.8(b), it shall provide Contestant with written notice of such election
(a "Private Contest Election") on or before the last date payment pursuant to
Section 5.1 or 5.2 of this Appendix D may be made in compliance with Section 5.5
of this Appendix D (the "Election Deadline"). The making of a Private Contest
Election shall cause the period during which payment may be made in compliance
with Section 5.5 of this Appendix D to be tolled until ten (10) days after the
date a final determination with respect to the amount of the Tax Claim is made
by the Private Mediator pursuant to Section 4.8(b)(2) of this Appendix D.
(2) Within 30 days of Contestant's receipt of such Private Contest
Election, each of Contestant and Indemnitor shall submit to the other the names
of 3 individuals qualified to serve, and whom they would consent to being
appointed, as the Private Mediator, and which individuals have informed the
submitting party that they would be willing to serve as such Private Mediator.
Within 30 days of the end of the period during which the parties may submit
names of potential Private Mediators to each other, the Contestant and
Indemnitor shall jointly agree as to the appointment of one of the proposed
Private Mediators. The Contestant and Indemnitor shall submit the Tax Claim to
the Private Mediator in a proceeding that (i) with respect to a Tax Claim which
does not arise out of a final judgment entered by the United States Tax Court,
the United States Court of Federal Claims, a United States District Court or
other available trial court or similar judicial forum will be governed by the
Rules of the United States Tax Court (a "Private Trial") and (ii) with respect
to a Tax Claim which does arise out of a final judgment entered by the United
States Tax Court, the United States Court of Federal Claims, a United States
District Court or other available trial court or similar judicial forum, an
appeal of such judgment to the United States Court of Appeals for the Sixth
Circuit (a "Private Appeal"). The Contestant shall present the case of the
relevant Governmental Authority in support of the Tax Claim and Indemnitor shall
present the case of the taxpayer in opposition to the Tax Claim. A Private Trial
before the Private Mediator will be conducted in a manner consistent with a
trial de novo in the United States Tax Court; provided, however, that
notwithstanding any provision of the Rules of such Court to the contrary, (A)
the parties shall engage in discovery only to the extent that each party may
make discovery requests of the other party or its Affiliates to the extent such
requests relate to documents in the possession of such other party and which
documents are relevant to the Tax Claim and (B) the decision of the Private
Mediator shall not be appealable. Subject to the powers granted the Private
Mediator in this Section 4.8(b)), the
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Contestant and the Indemnitor shall, with respect to a Private Trial conducted
pursuant to this Section 4.8(b)), have the ability to present the testimony of
witnesses, introduce documentary evidence, and otherwise fully develop a record
in such proceeding. The Private Mediator (i) with respect to a Private Trial
conducted pursuant to this Section 4.8(b)), shall have all powers exercisable by
a judge of the United States Tax Court including, without limitation, the power
to set the calendar for the proceeding, to set briefing schedules, to rule on
motions, and to encourage and cause the parties to reach a settlement with
respect to the Tax Claim and (ii) with respect to a Private Appeal conducted
pursuant to this Section 4.8(b)), shall have all powers exercisable by a judge
of the United States, Court of Appeals for the Sixth Circuit; provided, however,
that the Private Mediator must have made a final determination as to the amount
of the Tax Claim or the Contestant and Indemnitor must enter into a settlement
regarding the amount of such Tax Claim no later than twelve months from the date
the Private Mediator is appointed; and provided, further, that in rendering a
final determination, the Private Mediator shall state in reasonable detail the
factual and legal bases for his or her determination in a written opinion and
shall endeavor to make clear the effect of the determination on the Recomputed
Baseline, determined immediately prior to such determination. The determination
of the Private Mediator shall be final in all respects and the indemnity payment
required to be made by Indemnitor pursuant to Section 5.1 or 5.2 of this
Appendix D shall be computed with reference to such final determination.
(3) The Contestant and Indemnitor shall bear their own costs incurred
in connection with a proceeding conducted pursuant to this Section 4.8(b). The
costs incurred in connection with the conduct of the proceeding, including the
cost of the Private Mediator, shall be borne, respectively, fifty percent (50%)
by the Contestant or Contestants and fifty percent (50%) by the Indemnitor or
Indemnitors.
(c) In the event any potential claim or proposed adjustment that relates to
a Restructuring Tax, or that could result in a Step-Up Tax, arises in or is made
a part of an audit of Tastemaker or the Owners or any of their Affiliates (each
an "Audited Party"), the Audited Party shall (i) promptly notify the Interested
Persons of such claim or adjustment and provide the Interested Persons with
relevant information thereto (including a copy of any relevant written notices
and information or document requests received), (ii) advise the Interested
Persons of the status of such audit insofar as is relevant to the Interested
Persons' interests (including, to the extent relevant, providing copies to the
Interested Persons of all correspondence, providing the Interests Persons with
reasonable advance notice of meetings or significant telephone conferences with
the relevant Governmental Authority, and consulting with the Interested Persons
regarding strategy decisions with respect to such audit).
The Audited Party and the Interested Persons shall jointly make
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all decisions as to the substantive legal arguments to be set forth in the
portion of any written petition, brief and similar submission relating to the
claim or adjustment which is the subject of this Section 4.8(c), and the Audited
Party shall provide to the Interested Persons for their review the portion of
any draft of such petition, brief and other submission relating to such claim or
adjustment. The Interested Persons shall have right to consent to any settlement
by the Audited Party with the relevant Governmental Authority insofar as such
settlement relates to a Step-Up Tax, which consent shall not be unreasonably
withheld. Tastemaker and the Interested Persons will each use their reasonable
best efforts to coordinate their efforts with respect to any simultaneous audit
of Tastemaker, an Owner or any of its Affiliates or an Interested Person or any
of its Affiliates, to the extent such audits involve identical or related
issues.
4.9. Covenants of the Interested Persons (a) The Interested Persons
covenant that any principal payments on or refinancing of the Tastemaker Debt
within one year of the Fries Withdrawal Date shall be done solely with the
proceeds of a liability of the then obligor on the Tastemaker Debt, the proceeds
of which are allocable under the rules of Treasury Regulation Section 1.163-8T
to payments discharging the Tastemaker Debt (the "Tastemaker Refinanced Debt,"
which term shall also include any liability of the then obligor on the
Tastemaker Refinanced Debt, the proceeds of which are allocable under the rules
of Treasury Regulation Section 1.163-8T to payments discharging such Tastemaker
Refinanced Debt). The Tastemaker Debt and any Tastemaker Refinanced Debt shall
have an aggregate term of, and will remain outstanding for, in the aggregate, at
least four months after the Fries Withdrawal Date.
(b) The Interested Persons covenant that none of F&F or any F&F Affiliate
shall be liquidated or dissolved or otherwise suffer a termination of its
corporate existence and none of F&F or any F&F Affiliate shall be a party to any
reorganization (other than a reorganization in which F&F or such F&F Affiliate,
as the case may be, is the surviving corporation) within two years of the Fries
Withdrawal Date.
(c) The Interested Persons covenant that none of the assets purchased from
Tastemaker by the Interested Persons or any Affiliate of the Interested Persons
shall be transferred to F&F or any F&F Affiliate within two years of the Fries
Withdrawal Date.
(d) The Interested Persons covenant that (i) except for assets transferred
in the ordinary course of business, substantially all of the assets of
Tastemaker immediately prior to the Fries Withdrawal which are received by F&F
as part of the Fries Withdrawal shall remain in F&F for at least two years
subsequent to the Fries Withdrawal Date and (ii) except for assets transferred
in the ordinary course of business, none of
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the assets distributed by Tastemaker to F&F or any F&F Affiliate as part of the
Fries Withdrawal shall be transferred by F&F or such F&F Affiliate, as the case
may be, within two years of the Fries Withdrawal Date to any Affiliate of the
Interested Persons that received assets from Tastemaker by purchase pursuant to
the Designated Transaction Agreements.
(e) The Interested Persons covenant that F&F shall transfer a portion of
its partnership interest in Tastemaker to one or more F&F Affiliates, each such
F&F Affiliate shall receive distributions of one or more significant parcels of
real property constituting substantially all of the real property held by
Tastemaker immediately prior to the Fries Withdrawal, and that any lease of each
such parcel of real property to F&F shall be pursuant to a lease agreement that
constitutes a "true" lease for United States federal income tax purposes.
(f) The Interested Persons and Owners each covenant that, subject to
requirements of law, financial reporting requirements, and the provisions of
Sections 2.4 and 4.8 of this Appendix D, with respect to all transactions
executed in connection with or as contemplated by the Wrap Agreement, the F&F
Transaction Agreement, the Hercules Transaction Agreement, the Contribution
Agreement, and the Partnership Agreement (including, but not limited to, the
Fries Withdrawal), such Interested Persons and Owners (i) will not take any
action inconsistent with the separate legal status of all entities participating
in such transactions and the legal ownership of assets as reflected in such
agreements and (ii) will report the Transactions for Tax purposes in a manner
consistent with the form of such transactions.
4.10. Taxing Jurisdictions. At or prior to the Closing, the Owners shall
provide the Interested Persons with a list of all jurisdictions, whether foreign
or domestic, to which any Tax is payable by F&F or any Company.
5. INDEMNITY
5.1. Tax Indemnity by the Owners. (a) Notwithstanding anything in the D&F
Transaction Agreements, Transaction Documents or Partnership Agreement to the
contrary, Mallinckrodt, with respect to Mallinckrodt Taxes (other than any Tax
constituting a Section 351 Loss), Hercules, with respect to Hercules Taxes, and
Mallinckrodt and Hercules, jointly and severally, with respect to all Taxes
(including Restructuring Taxes) other than Mallinckrodt Taxes, Hercules Taxes,
and any Tax constituting a Section 351 Loss, shall indemnify and hold harmless
the Interested Persons and their Affiliates against (i) any Tax of F&F or a
Company related to the Tax Indemnification Period, (ii) any Restructuring Tax
regardless of the taxable period to which it relates, and (iii) any liabilities,
costs, expenses (including, without limitation, reasonable expenses of
investigation and attorneys'
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fees and expenses), losses, damages, assessments, settlements or judgments
arising out of or incident to the imposition, assessment or assertion of any Tax
described in (i) or (ii), including those incurred in the contest in good faith
in appropriate proceedings relating to the imposition, assessment or assertion
of any such Tax, and any liability as transferee (the sum of (i), (ii) and (iii)
being referred to herein as a "Tax Loss").
(b) For purposes of this Section 5.1, in the case of any Tax that is
payable for a Straddle Period, the portion of such Tax related to the
corresponding Short Period shall be determined under the principles of Treasury
Regulation Section 1.1502-76(b), applying such Regulation in the manner set
forth in Section 4.1 of this Appendix D.
5.2 Indemnity by Owners and Interested Persons Relating to Basis Step-Up.
(a) If after the Fries Withdrawal Date there shall be a Redetermination Event,
then the Owners shall pay F&F, Roche or Roche's Affiliates, as directed by
Roche, an amount (such amount, a "Step-Up Loss") equal to eighty-five percent
(85%) of the sum of the following five items:
(i) the excess, if any, of (A) the lower of (x) the Initial Baseline
and (y) the Pre-Determination Recomputed Baseline, over (B) the
Post-Determination Recomputed Baseline;
(ii) the amount, if any, of interest and penalties actually assessed
in connection with such Redetermination Event, multiplied by a
fraction (such fraction, the "Adjustment Fraction"), (A) the
numerator of which is the amount described in clause (i) and (B)
the denominator of which is the excess of (x) the
PreDetermination Recomputed Baseline over (y) the
Post-Determination Recomputed Baseline;
(iii) the product of:
(A) interest (calculated by using the applicable United States
federal income Tax underpayment rates in effect from time to
time) on such additional Tax, if any, of F&F, Roche or a
Roche Affiliate, as is, was, will be or would become due in
respect of the net reduction in depreciation or amortization
deductions relating to Other Open Years which occurs solely
as a result of such Redetermination Event; and
(B) the Adjustment Fraction;
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(iv) interest (calculated by using a rate of 6 percent, compounded
quarterly and running from the Fries Withdrawal Date through and
including the date of payment pursuant to this Section 5.2(a)) on
the portion of the amount described in clause (i) which is
attributable to the net reduction in depreciation or amortization
deductions relating to taxable periods of F&F, Roche or a Roche
Affiliate subsequent to the last Other Open Year for, as the case
may be, F&F, Roche or such Roche Affiliate; and
(v) interest (calculated by using a rate of 6 percent, compounded
quarterly) on each portion of the amount described in clause (i)
which is attributable to a net reduction in depreciation or
amortization deductions relating to an Other Open Year or a
taxable period of F&F, Roche or a Roche Affiliate which is the
subject of the Tax Claim resulting in such Redetermination Event;
provided, in the case of each portion of the amount specified in
clause (i) that is attributable to a particular quarter of such
Other Open Year or taxable period of F&F, Roche or a Roche
Affiliate, that interest on such portion of such amount shall run
from the Fries Withdrawal Date through the end of such quarter.
(b) If after the Fries Withdrawal Date there shall be a Redetermination
Event, then the Interested Persons shall pay the Owners or the Owners'
Affiliates, as directed by the Owners, an amount (such amount, a "Step-Up Gain")
equal to eighty-five percent (85%) of the sum of the following four items:
(i) the excess, if any, of (A) the lower of (x) the Initial Baseline
and (y) the Post-Determination Recomputed Baseline, over (B) the
Pre-Determination Recomputed Baseline;
(ii) the product of:
(A) interest (calculated by using the applicable United States
federal income Tax overpayment rates in effect from time to
time) on such refunds of Tax, if any, to which F&F, Roche or
a Roche Affiliate, is, will be or would be entitled by
reason of the net increase in depreciation or amortization
deductions relating to Other Open Years which occurs as
solely a result of the Redetermination Event; and
(B) a fraction, (x) the numerator of which is the amount
described in clause (i) of this Section 5.2(b) and (y) the
denominator of
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which is the excess of (I) the Post-Determination Recomputed
Baseline over (II) the Pre-Determination Recomputed
Baseline;
(iii) interest (calculated by using a rate of 6 percent, compounded
quarterly and running from the Fries Withdrawal Date through and
including the date of payment pursuant to this Section 5.2(b,))
on the portion of the amount described in clause (i) of this
Section 5.2(b,) which is attributable to an increase in
depreciation or amortization deductions relating to taxable
periods of F&F, Roche or a Roche Affiliate subsequent to the last
Other Open Year for, as the case may be, F&F, Roche or such Roche
Affiliate; and
(iv) interest (calculated by using a rate of 6 percent, compounded
quarterly) on each portion of the amount described in clause (i)
which is attributable to a net increase in depreciation or
amortization deductions relating to an Other Open Year or a
taxable period of F&F, Roche or a Roche Affiliate which is the
subject of the Tax Claim resulting in such Redetermination Event;
provided, in the case of each portion of the amount specified in
clause (i) that is attributable to a particular quarter of such
Other Open Year or taxable period of F&F, Roche or a Roche
Affiliate, that interest on such portion of such amount shall run
from the Fries Withdrawal Date through the end of such quarter.
(c) For purposes of this Appendix C, "Other Open Years" shall mean, in the
case of a Redetermination Event subject to Section 5.2(a) or 5.2(b), all taxable
periods of F&F, Roche or a Roche Affiliate (other than taxable periods which are
the subject of the Tax Claim which resulted in such Redetermination Event), in
respect of which, as of the date of such Redetermination Event, (x) a Tax Return
was filed by or due from F&F, Roche or such Affiliate of Roche (as the case may
be) and (y) the statute of limitations (giving effect to any waiver, mitigation
or extension thereof) has not expired.
5.3. Reciprocal Indemnity by Roche and Mallinckrodt. If there shall be a
Final Determination that, solely as a result of any breach by Roche or
Mallinckrodt, as the case may be, of its covenant in Section 7.3 of the
Contribution Agreement, the contribution by Roche of the G-R Stock, or by
Mallinckrodt of the capital stock of F&F, to Newco pursuant to the terms of the
Contribution Agreement fails to qualify as a tax-free contribution under Section
351 or, in the case of Roche, Section 368(a)(1)(B) of the Code, then Roche or
Mallinckrodt, as the case may be, shall indemnify the other party or its
Affiliates against (i) the amount of any Tax of such other party or its
Affiliates resulting from such failure, and (ii) any liabilities, costs,
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expenses (including, without limitation, reasonable expenses of investigation
and attorneys' fees and expenses), losses, damages, assessments, settlements or
judgments arising out of or incident to the imposition, assessment or assertion
of any Tax described in (i), including those incurred in the contest in good
faith in appropriate proceedings relating to the imposition, assessment or
assertion of any such Tax (the sum of (i) and (ii) being referred to herein as a
"Section 351 Loss"); provided, that Roche shall not be obligated to indemnify
Mallinckrodt or its affiliates if such failure results from (A) the terms of the
Newco Preferred Stock, the Keepwell Agreement or the Letter of Credit, (B) any
action taken by Roche, or which Roche causes to be taken by Newco, pursuant to
or as required by the terms of the Newco Preferred Stock (including Roche's
exercise of any right thereunder), the Keepwell Agreement or the Letter of
Credit, or (C) Mallinckrodt's exercise of any right under the Newco Preferred
Stock, the Keepwell Agreement or the Letter of Credit.
5.4. Amount of Recovery for Damages and Losses Relating to Taxes. (a)
Subject to Section 5.4(b) of this Appendix D, but otherwise notwithstanding
anything in the Partnership Agreement or any of the Transaction Documents or D&F
Transaction Agreements to the contrary, with respect to any Tax Loss, Step-Up
Loss, Step-Up Gain, or Section 351 Loss against which an Interested Person or
its Affiliate or an Owner or its Affiliate is entitled to be indemnified
pursuant to this Section 5, such party shall be indemnified against the full
amount of such Tax Loss, Step-Up Loss, Step-Up Gain or Section 351 Loss, as the
case may be, regardless of the amount of such Tax Loss, Step-Up Loss, Step-Up
Gain, or Section 351 Loss or the total amount of all Tax Losses, Step-Up Losses,
Step-Up Gains, or Section 351 Losses (or any categories thereof) incurred as of
any date.
(b) Notwithstanding anything in the Partnership Agreement or any of the
Transaction Documents or D&F Transaction Agreements to the contrary:
(i) with respect to any Tax Loss, the aggregate recovery to which the
Interested Persons and their Affiliates are entitled under Section 5.1 of
this Appendix D, Section 8 of the Agreement, Section 8 of the F&F
Transaction Agreement, Section 8 of the Hercules Transaction Agreement,
Article 11 of the Partnership Agreement and Section 8 of the Contribution
Agreement shall be reduced to the extent that such Tax Loss has been taken
into account in determining the Adjusted Aggregate Value; and
(ii) with respect to any Tax Loss, Step-Up Loss, Step-Up Gain, or
Section 351 Loss, the Owners and their Affiliates or the Interested Persons
and their Affiliates, as the case may be, shall be entitled to an aggregate
recovery under this Section 5, Section 8 of the Agreement, Section 8 of the
F&F Transaction Agreement, Section 8 of the
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Hercules Transaction Agreement, Article 11 of the Partnership Agreement and
Section 8 of the Contribution Agreement no greater than the amount of such
Loss or such Gain, as the case may be.
(c) Each party shall bear its own costs incurred in connection with a Tax
Claim relating to a Step-Up Tax (and, in the case of a Redetermination Event
which is a determination by a Private Mediator, any costs incurred in connection
with the Tax Claim with respect to which the Private Mediator made its
determination); provided, that any cost of a proceeding before a Private
Mediator shall be borne by the parties as provided in Section 4.8(b)(3) of this
Appendix D.
5.5. Indemnification Procedure. (a) Any payment pursuant to Section 5.1 or
5.2 of this Appendix D shall be made not later than 30 days after receipt by, as
the case may be, the Interested Persons, Owner or Owners obligated to make
payment pursuant to such Section 5.1 or 5.2 of written notice from each
Interested Person or Owner which is, or an Affiliate of which is, entitled to
such payment pursuant to such Section 5.1 or 5.2. Such notice shall state (i) in
the case of any Tax Loss, that such Loss has been paid by an Interested Person
or its Affiliates and the amount thereof, and (ii) in the case of any
Redetermination Event (other than a final determination described in clause
(iii) of the definition of "Final Determination") or any event which would be
described in clause (i) or (ii) of the definition of "Final Determination" if a
timely Private Contest Election were not filed pursuant to Section 4.8(b)(1),
that such Redetermination Event or other event, as the case may be, has occurred
and the amount of the indemnity payment requested.
(b) Any payment pursuant to Section 5.3 of this Appendix D shall be made
not later than 30 days after receipt by Roche or Mallinckrodt, as the case may
be, of written notice from the other party stating that a Section 351 Loss has
been paid by such other party or its affiliates and the amount thereof. Roche
agrees to give prompt notice to Mallinckrodt of any Section 351 Loss and the
assertion of any claim, or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought hereunder which Roche deems to be
within the ambit of Section 5.3 (specifying with reasonable particularity the
basis therefor) and will give Mallinckrodt such information with respect thereto
as Mallinckrodt may reasonably request. Mallinckrodt agrees to provide prompt
notice to Roche of any Section 351 Loss and the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of which indemnity may
be sought hereunder which Mallinckrodt deems to be within the ambit of Section
5.3 (specifying with reasonable particularity the basis therefor) and will give
Roche such information with respect thereto as Roche may reasonably request.
6. SURVIVAL
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Notwithstanding anything in the Partnership Agreement or any of the
Transaction Documents or D&F Transaction Agreements to the contrary, the
representations, warranties, covenants and agreements contained in the
Partnership Agreement, Transaction Documents and D&F Transaction Agreements, to
the extent that such representations, warranties, covenants and agreements
relate to Taxes (including, without limitation, Section 3.13 of the Agreement,
Section 7.3 of the Contribution Agreement, and all provisions of this Appendix
D), shall survive for the full period of all applicable statutes of limitations
(giving effect to any waiver, mitigation or extension thereof).
7. ITEMS TREATED AS AGGREGATE VALUE ADJUSTMENTS
7.1 Indemnity and Other Payments Treated as Aggregate Value
Adjustments. For Tax purposes, the Owners and the Interested Persons shall
treat, and shall cause their respective affiliates to treat, any amount paid by
the Owners or the Interested Persons under Sections 2.3, 4.1, 4.2(d) or 5 of
this Appendix D, Section 8 of the Agreement, Section 8 of the F&F Transaction
Agreement, Section 8 of the Hercules Transaction Agreement, Article 11 of the
Partnership Agreement or Section 8 of the Contribution Agreement as an
adjustment to the amount of consideration paid or delivered pursuant to the D&F
Transaction Agreements or the Transaction Documents or assets received by F&F or
any F&F Affiliate or contributed to Tastemaker in connection with a Fries
Withdrawal, as appropriate, unless a Final Determination causes any such amount
not to be so treated. In the event of such a Final Determination, the Interested
Persons or Owners, as the case may be, shall pay an amount that reflects the
hypothetical Tax consequences of the receipt or accrual of such amount paid
under Sections 2.3, 4.1, 4.2(d) and 5 of this Appendix D, Section 8 of the
Agreement, Section 8 of the F&F Transaction Agreement, Section 8 of the Hercules
Transaction Agreement, Article 11 of the Partnership Agreement and Section 8 of
the Contribution Agreement listed in the preceding sentence, using the maximum
statutory rate (or rates, in the case of an item that affects more than one Tax)
applicable to the recipient of the payment for the relevant year, and
reflecting, for example, the effect of deductions available for interest paid
with respect to such amount or for state and local income Taxes.
7.2 Interest on Items Treated as Aggregate Value Adjustments. Any payment
required to be made by the Interested Persons or Owners under Sections 4.1,
4.2(d) or 5 of this Appendix D that is not made when due shall bear interest at
a rate per annum equal to the rate of interest announced by Xxxxxx Guaranty
Trust Company of New York from time to time as its Base Rate in New York City in
effect from time to time during the period from the Fries Withdrawal Date to the
date of payment. Such interest shall be payable at the same time as the payment
to
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which it relates and shall be calculated daily on the basis of a year of 365
days and the total number of days elapsed.
